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From the collection of the 

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o Prelinger 
v Jjibrary 

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San Francisco, California 







By Horace B. Davis 

By Robert W. Dunn and Jack Hardy 

By Anna Rochester 

By Charlotte Todes 

By Robert W. Dunn 

By Grace Hutchins 

Other volumes in this series are planned 
on Transportation, Construction, Clothing, 
Shoes and Leather and Food. 

Copyright, 1933, by 

Printed in the U. S. A. 
This book is composed and printed by union labor. 





Number and Location, 15; Women, 18; Young 
Workers and Old Workers, 21; Negroes and For- 
eign-born, 27. 

Mortality Rates, 36; Accident Severity Rates, 37; 
Accident Rates by Departments, 39; Safety and 
Profits, 42; Safety and the Machine, 46; Speed-up 
versus Safety, 47; Doctors and Compensation, 49; 
Occupational Diseases, 51; Pneumonia, 55. 


A Test of Steel Wage Rates, 60; Deductions from 
Wages, 64; Irregular Earnings, 65; Wage Rates 
and Wage Cuts, 67 ; The Sliding Scale, 69 ; Stand- 
ards of Living, 70. 


Why the Twelve-Hour Day Persisted, 77; Seven- 
Shift Week, 80; Speed-up, 81. 


Some Causes of Unemployment, 94; Who Are the 
Unemployed? 96; Employers' "Relief" for Unem- 
ployed, 100; The Stagger Plan, 101 ; Company 
"Relief," 104; Charity and Public Relief, no. 

Productivity, 116; Changes in Technique, 117; The 
Market for Steel, 123 ; Foreign Markets for Ameri- 
can Steel, 125; Making Steel and Making Wars, 
126; The Tariff, 129; Shifting Locations and Van- 
ishing Jobs, 133. 

Company Towns, 140; Company Unions, 148; Edu- 
cation, 151; Pensions, 155; Group Insurance, 159; 
Spy System and Blacklist, 163; Who Benefits by 
"Welfare"? 168. 

WORKS , . 172 

The Midwest, 177 ; The South, 178 ; The East, 179 ; 
The United States as a Whole, 180; "Vertical" 
Combination, 181 ; Recent Mergers, 184 ; The Oli- 
garchyControl by Financiers, 188; The Invest- 



ment Trust, 191 ; Price Control, 192 ; The Armament 
Trust, 195 ; The "Attack" on the Trust, 201. 

Analyzing Company Profits, 204; Post- War Profits, 
209; Dividends in the Crisis, 211; Royalties, 212; 
War Profits, 213; Who Gets the Money? 217; 
Fleecing the Little Gamblers, 220; Some Fortunes 
from Steel, 221. 


Early History, 223 ; The Homestead Strike of 1892, 
225; The Battle for the Key Positions, 229; The 
Amalgamated Association in the South, 231 ; Atti- 
tude to Negroes and Unskilled, 232; Failure of the 
Amalgamated Association Leadership, 234; Steel 
Employers Smash Unions in Other Industries, 236; 
Early "Left- Wing" Activities, 237; Spontaneous 
Strikes, 238. 

The Great Steel Strike, 244; Policies of the A. F. 
of L. Unions in Steel 1920-1932, 251; Opposition 
Groups in the Amalgamated Association, 255; The 
Steel and Metal Workers Industrial Union, 257; 
Policies of the Trade Union Unity League, 261 ; 
The Struggle for Hegemony, 263; The "New Deal" 
and the Steel Workers, 265. 


APPENDICES . . ^ . . . . . . . . 283 
INDEX . . . . . 299 


Shaking Down Slag in the Open Hearth .... 96 

New York City Home of Chas. M. Schwab ... 97 

The "Home" of a Bethlehem Steel Corp. Worker . . 97 

The Blowing of a Bessemer Converter 128 

An Electric Furnace . . . ..*.*... . 129 

A Manual Type Sheet Mill . . , v . ... 224 

A Continuous Sheet Mill 225 

A Steel Trust Ad During the 1919 Strike .... 242 

William Z. Foster 256 

Tear Gas and Bullet Barrage Against Ambridge, Pa., 

Strikers 257 


THIS is one volume in a series of industrial studies being 
prepared by the Labor Research Association, an organization 
devoted to the gathering and interpretation of economic ma- 
terial for the labor movement. 

The aim of this series is to present a picture of the devel- 
opment of the important American industries in relation to 
the workers employed in them. Other books dealing with 
American industries have been written from the viewpoint 
of the employer, the personnel manager, and the technical 
expert. But they have all been interested in perpetuating the 
present system of exploitation and in piling up more profits 
for powerful corporations. 

The present series studies American industries from the 
worker's viewpoint. What is the trend of production in a 
given industry? What are the wages, hours, and conditions 
of employment, and how do these compare with those in other 
industries? What is the extent of unemployment and what 
are the prospects of keeping their jobs for those workers 
still employed ? What profits are the companies making, and 
how are they often concealing them? What mergers are 
being carried through as the employing class attempts to 
tighten its control? How are the corporations associated to 
protect their interests and oppose those of labor? To what 
extent are the workers already organized in company unions, 
in the American Federation of Labor, in the new Left Wing 
unions? What are the prospects for effective unionization? 
What is the real purpose of the "welfare" and "industrial 
relations" propaganda of the employers? What can the 



workers in the industries of the United States look forward 
to under the present economic system? These are some of 
the questions this series seeks to answer. 

These books describe not only the hardships and grievances 
of the workers in a given industry. They analyze the class 
conflicts arising between those who uphold the capitalist sys- 
tem of production and distribution and the workers who are 
organizing for revolutionary change. Those who seek to 
put an end to the rule of the employing class will find in 
these volumes not only graphic pictures of living and work- 
ing conditions, but an interpretation of economic struggle and 
suggested programs of action to meet the offensives of the 

To the militant workers who, in the face of overwhelming 
obstacles, are carrying on the fight against the strongly or- 
ganized forces of the capitalist class these books are dedicated. 



THE steel industry is not only a basic industry it is the 
key industry of the nation. Dominated by a single firm 
which in turn is directly controlled by the leading financial 
interests in the country, steel expresses in industry the policy 
of the American financial oligarchy. This is why employers 
and business men look to see what steel is doing and adjust 
their policies accordingly. This is why the wage rate set by 
the United States Steel Corporation for its unskilled labor 
is the most important single wage rate in American industry. 

Steel is also the key industry from another point of view. 
Steel is the basic material for the production of capital goods. 
The production of steel reflects the demand for capital goods, 
and is a barometer of industrial production generally. Again, 
steel is the basic war industry. Nations which wish to be 
self-sufficient from a military point of view must assure 
themselves an uninterrupted supply of steel. 

The heavy iron and steel industry, and the light industries 
which are organically connected with it, employ directly hun- 
dreds of thousands of workers. Millions of workers' fami- 
lies are dependent directly on steel for their support. What 
of these workers? How has steel treated them in the past? 
What do they anticipate from steel under the capitalist sys- 

The temporary increase in production in the Spring of 
1933 found the steel workers in a mood of profound disillu- 
sionment with capitalism and its institutions. 

The three years of economic crisis which began in earnest 
about the middle of 1930 had left the workers in the steel 
industry virtually penniless. Nine out of every ten had 



become destitute and had either fallen heavily in debt or 
slipped into dependency on others for their livelihood. Thou- 
sands of single steel workers had taken to the road in the 
vain hope of picking up a living in some other part of the 
country. Scores of thousands of family men had seen their 
wives and children decline in health and approach a state of 
semi-starvation while they themselves became so weakened 
by long privation that they half dreaded to go back to full- 
time employment since they would hardly be able to stand 
the intensified pace of work. 

The steel employers, on the other hand, were evidently 
determined to follow out to the end the policies which had 
become known as characteristic of the industry, including 
those which had been specifically forbidden by law. Their 
"code of fair competition/' presented in July, 1933, and still 
more the admissions made at the code hearings by the spokes- 
men for the industry, made it clear that the system of "de- 
livered" price quotations which the Federal Trade Commis- 
sion had specifically forbidden in 1924 as an "unfair method 
of competition" had remained in force ever since with com- 
paratively slight modifications. The clause in the proposed 
code which provided, "Unless and until the Code shall have 
been amended . . . none of the members of the Code shall 
initiate the construction of any new blast furnace or open 
hearth or Bessemer steel capacity" (Article V, Section 2) 
constituted a reversion to the reactionary policy of "no in- 
ventions, no innovations" which the U. S. Steel Corp. had 
attempted to enforce for two decades after its formation. 

The clauses in the code regarding the formation of com- 
pany unions in the steel plants were so obviously at variance 
with the provisions of the National Recovery Act that the 
Recovery Administrator was obliged to demand their removal. 
Robert P. Lamont, former president of the American Iron 
and Steel Institute, speaking for the employers, acceded 
nominally, but announced in effect that the steel employers 


would support company unions and fight legitimate unions 
anyway. The company unions which after the passage of the 
National Recovery Act had been set up on a uniform plan by 
all the important companies not already having company 
unions were not abolished forthwith. The companies would 
insist, it was evident, on a "Roman peace" in labor relations, 
with all power concentrated in their own hands. 

The wages which they proposed, with a common-labor rate 
of 40 cents per hour in the Pittsburgh and Chicago districts, 
were actually lower in terms of purchasing power than the 
rates which had been in force from 1923 to 1931. The code 
provisions on hours were so broad and indefinite that no 
employer needed to feel himself obliged to change his sched- 
ule of hours at all, except on the unlikely supposition that 
production would suddenly increase nearly to full capacity. 

The rule-or-ruin policy of the steel bosses was nothing new. 
Even before 1930 they had begun to bear down on labor. 
Certain concessions which had been considered customary in 
the industry, such as a relatively slow pace of work, had been 
briskly revoked; the seven-day week, which for a time had 
seemed on the road to extinction, was generally reintroduced 
in the period after 1923, and the policy of rigidly repressing 
organization moves on the part of the workers was if any- 
thing intensified, while the spy system reached a develop- 
ment never before surpassed. 

The crisis with its reintroduction of the truck system (pay- 
ment by credit at the company stores) merely aggravated 
certain problems which had been serious in the industry for 
some years before. Unemployment was no novelty to the 
steel workers in 1930. A gradually increasing pressure on 
labor all along the line had been discernible for some years 

In many other respects subtle changes have put the steel 
industry in a new position. The technique of the industry 
has been overhauled; the market for steel products has 


changed in nature and locality ; the type of worker employed 
has changed. And most important of all, the industry has 
ceased to be an industry with expanding employment and 
has become an industry with contracting employment. 

For all these reasons and others the investigations of the 
steel industry made by the Russell Sage Foundation in its 
Pittsburgh Survey just before the war, by the United States 
Commissioner of Labor about the same time, and by the 
Commission of Inquiry of the Interchurch World Move- 
ment in 1919, none of which was fully adequate as a descrip- 
tion of the steel worker's conditions of existence, are now 
definitely out of date even for the ground they covered. The 
virtual passing of the 1 2-hour day has all but removed one 
outstanding grievance, or rather changed its form ; but other 
problems are to-day fully as pressing as the 1 2-hour day ever 
was. The present study attempts to give a new perspective 
on the industry, from the steel worker's point of view. It 
outlines the steel worker's problems, and indicates some 
reasons for the growth of a spirit of revolt in the steel towns 
against oppression and exploitation. 

For five out of the last ten years the writer has studied 
the problems of the workers in the steel industry. At first 
he worked as a laborer in the mills. After an industrial in- 
jury forced his retirement from this occupation, the granting 
of an Amherst Memorial Fellowship made it possible for 
him to visit the principal steel centers of England, France, 
Germany and the United States. Material collected during 
that period has been freely drawn on in the present study. 

To thank all the individual workers who have contributed 
the information and impressions on which the present study 
is based would be impossible. Suffice it to say that the manu- 
script is built up largely on material collected by first-hand 
interviews; furthermore, it has been read and criticized by 


workers from the industry. Every statement has been care- 
fully checked so far as this was humanly possible. 

Edward Ernst and Emil M. Haiti, who conducted an in- 
vestigation of the industry in 1929, and Edwin Clark of 
Cleveland, who made a special study in 1932, have very 
kindly placed their work sheets at the writer's disposal. Offi- 
cers and members of the Amalgamated Association of Iron, 
Steel & Tin Workers of North America and of the Steel & 
Metal Workers Industrial Union have given freely of their 
time. In the detailed work of assembling and compiling ma- 
terial invaluable help has been furnished by A. Shapiro, C. 
Rosenbloom, Vera Gruliow, Rose Rosenfeld and of course 
by members of the Labor Research Association. 

The writer is indebted to Kalmun Hecht, accountant and 
member of the Pen and Hammer organization of New York, 
for his collaboration in preparing certain sections dealing with 
the business end of the industry, and to the Pen and Hammer 
for computations in connection with Chapter I. Prof. 
Charles Reitell of the University of Pittsburgh had already 
developed some of the ideas contained in Chapter I in an 
unpublished manuscript which the author was fortunate 
enough to peruse in 1924. 

The manuscript has been read and criticized by members 
of the Labor Research Association and by Caroline Whitney 
and Constance A. Kiehel. Valuable criticism has also been 
received from members of the Faculty of Political Science 
at Columbia University, to whom the first seven chapters of 
'Labor and Steel were submitted in partial fulfillment of the 
requirements for the degree of Doctor of Philosophy. 

The author takes full responsibility for the opinions ex- 
pressed and for the shortcomings of the book. 


September, 1933. 


WHO are the workers who, under the operations of the 
profit system, alternate periods of feverish production of 
steel with periods of hideous idleness ? How many of them 
are there, and where do they live ? What proportion of them 
are laborers and skilled operatives respectively? What is 
their age, sex, color and nationality? How has their social 
composition been affected by the shift from increasing to 
declining employment? These are the questions which we 
shall attempt to answer briefly in this chapter. 

Number and Location 

The Census of 1930 lists 620,894 employees in the heavy 
iron and steel industry that is, in blast furnaces, steel works 
and rolling mills. * Of these, some 519,500515,000 males 
and 4,500 females are wage-earners, or, as we shall call 
them, workers. They represent nearly a third of all the iron 
and steel workers in the world, whose number may be set, 
for a rough guess, at 1,650,000. Since the iron industry is 
nowadays of secondary importance to steel, we shall refer 
to all the workers at iron blast furnaces and puddling mills, 
in steel works, and in iron and steel rolling mills as "steel 
workers." Besides the 519,500 steel workers, there are em- 
ployed in the American iron and steel industry 30,500 fore- 
men, officials and owners; 12,500 professional persons 
(draftsmen, chemists, engineers) ; and 58,000 clerical and 
allied workers, of whom 13,600 are women. 

* The census classification is "blast furnaces and steel rolling mills." 
This title is unduly compressed. "Blast furnaces and steel and rolling 
mills" would be more accurate. 



Not all of the employees of the big steel firms are steel 
workers. Outside the steel mills, on the great coal and iron 
mining properties of these companies, at their coke ovens 
and limestone quarries, and on their transportation routes, 
were employed in 1930 probably 136,000 wage-earners and 
7,000 salaried workers. 

There are also a large number of employees, not less than 
109,000 wage-earners and 13,400 salaried employees, who 
are attached to mills engaged in turning out products which 
are, or may be, manufactured in connection with iron and 
steel rolling mills (i.e., in the same plant), and who are closely 
allied to the heavy industry. The 48,500 workers in the 
plants which work up rods and bars purchased from mills into 
wire and wire products, are bound to be affected by develop- 
ments in the heavy industry, since wire products valued at 
more than half the total are produced in the wire depart- 
ments of steel works and rolling mills. Other workers whose 
fortunes are closely bound up with those of the workers in 
the heavy industry are the 17,000 making bolts, nuts, washers, 
and rivets ; 22,500 making iron and steel f orgings ; 2,000 in 
nail and spike plants ; 6,500 in steel spring plants ; and 12,500 
engaged in the manufacture of wrought pipe. 

Thus, in 1930, a total of some 822,000 wage-earners and 
70,500 salaried workers, officers and executives (including 
unemployed) either were workers for the companies in the 
heavy iron and steel industry or were intimately affected by 
developments in that industry. Since inspection of the census 
returns for typical steel towns shows that there are, on the 
average, about 1.8 dependents per worker in iron and steel, 
it may be estimated that over two and one-half million per- 
sons are directly affected by the labor policies of the Ameri- 
can steel companies. This is exclusive of the even more 
numerous group connected with the fabricating and finishing 
plants of the "light" iron and steel industry. 

There are heavy iron and steel plants in nearly every state 



of the union, but the bulk of the steel workers are concen- 
trated in the states which have ready access to raw materials 
and markets. The six states through which one passes in 
going from New York to Chicago by way of Philadelphia 
contain more than three-quarters of the steel workers, and 
Pennsylvania alone has more than a third of the total num- 
ber. The distribution is well indicated by the following 
table, which includes all gainful workers in the industry. 


(Source: Fifteenth Census of the U. S., Population Bulletin, 
Second Series, pp. 57-60.) 


State Workers 

Pennsylvania 21 1,682 

Ohio 129,685 

Illinois 52,775 

Indiana 45,563 

New York 32,751 

New Jersey 17,374 

Alabama 16,442 

Maryland 15,863 

West Virginia 14,006 

Massachusetts 12,261 

Michigan 12,243 

California 11,242 

Missouri 6,582 

Wisconsin 6,210 



.. i,i59 
All other states .... 7,474 

Total U. S 627,053 


Connecticut . 
Kentucky . . . 
Colorado . . . 
Minnesota . . 


Rhode Island 
Tennessee . . 


Oklahoma . . 
Delaware . 

In the several states, the iron and steel producing centers 
are relatively few and large, so that the steel workers are as 
closely bunched geographically, in all probability, as any 
group of workers of equal size in any industry. It is only 
necessary to mention the city of Pittsburgh, which includes 
only a fraction of the so-called Pittsburgh district, and which 
nevertheless has 23,000 steel workers. 



Women wage-earners are likely to be of increasing impor- 
tance in the industry. For the present, they are not numer- 
ous; the 4,500 women and girls employed in the mills and 
at the furnaces are overshadowed in number by the 13,600 
female office workers in the industry. All told, there are 
only 18,500 female employees in steel. But any great crisis 
would open the gates of the mills to thousands of women; 
the Great War found women in Great Britain pulling the 
levers at the rolls, and stacking plates, where only men had 
been seen before. Tradition alone prevents the entry of 
women to an increasing number of jobs, even in peace-time. 
In the Soviet Union, where women enjoy opportunities not 
open to them elsewhere, women may be found scattered 
throughout the heavy industry. 

The tradition which reserves the bulk of the steel jobs to 
men was reasonable enough in its origin. Making steel has 
been hot and heavy work. Even to-day, nearly half of the 
jobs in the industry require great physical exertion,* and 
most of the remainder are filled by promotion from the ardu- 
ous jobs. However, machines are taking over the heavy 
and hot work; and many of these machines can quite well 
be operated by women. 

There is no better place than the open-hearth steel mill to 
get an impression of the tremendous force that is nowadays 
controlled with a minimum of muscle power. As one steps 

* Employers of more than 650,000 workers in all industries of New 
York State were asked in 1930 to classify the jobs in their plants 
according to the amount of physical exertion required (i.e., great, 
medium, or slight). For all industries, the proportion of jobs re- 
quiring "great physical exertion" was &%%; for iron and steel, the 
proportion was 46%. Allowing for differences of definition among 
individual employers, iron and steel still stand out as an unusually 
arduous industry. (Data collected by Solomon Barkin for "The 
Older Worker in Industry," N. Y. State Legislative Document, No. 
66, I933-) 


onto the charging floor he is bewildered by the absence of 
workers. In the semi-darkness he can see the great ladle 
of molten iron, tilting gradually to discharge its contents into 
one of the furnaces. Somewhere in the gloom above, is the 
little box where sits the operator of the overhead crane; he 
controls this tilting motion. Another furnace door slowly 
opens; the visitor has to be shown the door-boy, on the far 
side of the charging-floor, who has pulled the lever to make 
it open. The charging machine's arm fixes itself into the 
end of a buggy full of scrap iron, lifts up the buggy, pokes 
it into the furnace, and dumps it. Inside the machine, barely 
visible among the flashing switches, is the worker who con- 
trols the operation. 

Tapping-time at another furnace ! It tilts slowly over until 
the slag begins to run out of the hole in the far side. And 
when the steel has all run out, and it is time to line the 
bottom and the back wall of the furnace, the backwall ma- 
chine will slide into place before the door of the furnace and 
spray dolomite against the slanting wall on the far side. The 
tilting and the spraying, like so many other processes on the 
open-hearth floor, are performed in a modern works by ma- 
chinery which could quite well be operated by women. The 
same story could be told of practically any other department 
in a highly integrated plant. 

Skilled Workers and Laborers 

The mechanization of jobs formerly performed by man- 
power probably accounts for one of the most important of 
the recent tendencies in steel the decreasing proportion of 
laborers, or, as some call them, the "unskilled." Since there 
is no exact definition of an unskilled worker, we class as 
laborers those who receive the starting rate of pay for adults. 
A study of wages paid to steel workers at various times shows 
that there are not as many laborers in proportion to the total 
number of steel workers as there were in iQio. 1 This con- 


elusion is all the more interesting because from 1890 to 1910 
the tendency was all the other way ; the U. S. Commissioner 
of Labor reported in 1911 that the tendency was to estab- 
lish the general wage on the basis of "common, unskilled 
labor." 2 

The explanation may be that in earlier years inventors, 
intent on cutting down the cost of employing high-paid work- 
ers, concentrated on mechanizing the skilled jobs; whereas 
in more recent years, with the smashing of the union and 
the decline in the level of wages paid the skilled workers, the 
heavy lifting and carrying jobs, formerly done by laborers, 
have been taken over by machinery. However, the influence 
of the union must not be exaggerated. 

The new jobs of operating new machines are different 
from the old jobs. They are more responsible than straight 
labor work, are frequently not under the direct control of a 
foreman, and are usually paid a little more than the common 
labor rate. Charles Reitell has given to the pulling of 
switches, the throwing of levers, the pushing of buttons, and 
the like, the name of "mental control" jobs, to distinguish 
them from "physical power" jobs. 3 They are neither skilled, 
nor semi-skilled, nor unskilled jobs; neither are they repair 
jobs. They are repetitive only in a broad sense; they do 
not make the worker a part of the machine; rather he runs 
the machine and controls it. Yet the jobs are not supervisory 
jobs either, in the old sense. They are something new, corre- 
sponding to the newness of the modern technique. 

At the present time (1933) perhaps 40% of all gainful 
workers in steel are laborers. In 1910 the proportion was 
more nearly $o%* The statistical technique which we have 
used to measure the bunching-up of wage rates shows that 
in 1931 the workers' wages were spread out more than in 
1910, but were still far from having reattained the degree of 
spreading-out which obtained in 1890. The tendency for steel 
workers to'drop into a common undifferentiated mass of un- 


skilled, all receiving the same rate of pay, has been reversed ; 
but it is still too early to speak of the "mental control" job as 
typical of the industry. The proportion of jobs requiring no 
training at all is probably twice as high in steel as in the 
average of all industries. 5 

Young Workers and Old Workers 

"Physical power" jobs require youth and strength; "men- 
tal control" jobs may be filled by aging workers. The field 
is open for steel bosses to employ older workers in increas- 
ing numbers without serious loss of profit; and since 1910 
the proportion of older workers in the typical steel plant has 
in fact increased more rapidly than the proportion of older 
men in the population at large. This tendency, like the tend- 
ency for the proportion of laborers to decrease, represents a 
sharp contrast with the conditions that prevailed before 1910. 
It is worth analyzing in some detail. 

During the long period of expanding employment which 
preceded the war, steel was a young man's industry. Young 
workers, usually unmarried, came from the farms of America 
and Europe to work in the heavy industry for a while, but 
relatively few of those who came to the industry remained 
there. Many workers with a trade, such as molders, brick- 
layers, electricians, and machinists, could come to the steel 
mills when employment in their own lines was slack, then 
drift away again. Instead of containing a normal proportion 
of settled family men, the steel population was a youthful 
population with a high rate of turnover. 

Old workers were unable to stand the pace of the steel 
mills, especially where the seven-day week was accompanied 
by the 1 2-hour day. "Too old at forty" was a common com- 
plaint. In 1910, only 13.6% of the laborers and iS% of the 
other workers in iron and steel were 45 years old or more, 
though 25% of all males aged 10 years and more fell 
in the age group "45 years and up." 


The companies have discriminated and still do discriminate 
in favor of young workers in hiring. No less than 14 com- 
panies, including some of the largest, admitted in the sum- 
mer of 1929 that they had a definite age limit of 45 years 
above which they would not hire. 6 One of these was the 
Jones & Laughlin Steel Corp. which had denied in the previ- 
ous year that it had any limit. 7 The Carnegie Steel Co., sub- 
sidiary of the U. S. Steel Corp., had set a precedent in 1904, 
when a general order is reported to have been issued from 
headquarters to all mills directing the superintendents to 
accept no more men over 40 years of age in any department, 
and in some departments to hire only men of 35 and under. 8 
In 1928 this company denied that it had any hiring age limit ; 
but in 1929 the employment superintendent at the company's 
Duquesne works admitted a hiring limit there of 45 years. 
Other companies in whose plants a hiring limit of 45 years 
was found in 1929 included Colorado Fuel & Iron Co., Beth- 
lehem Steel Corp., Crucible Steel Co. of America, Page Steel 
& Wire Co., Weirton Steel Co. (subsidiary of National Steel 
Corp.), and Wisconsin Steel Co. (subsidiary of International 
Harvester Co.). Spokesmen for 12 more companies said 
that they had a hiring age limit of 50 years, six set the limit 
at 55 years, and three at 60. But steel workers well know 
that employment officers in hiring, discriminate against older 
workers, limit or no limit, and that they operate more by 
their own estimate of a man's age than by his statement. 

The discrimination against older workers is probably more 
severe in iron and steel than in the average industry. In New 
York State, a special study carried out during a three-month 
period in 1930 showed that out of 212 male workers hired in 
iron and steel, only 30 or less than a seventh were 45 or over. 9 
The average for all industries was more nearly a sixth 
(16.5%). But even more important, only three of the 30 
hired in steel were being taken on for the first time : the other 
27 were being rehired. For the average of all industries, 


nearly half of the workers over 45 who were taken on were 
newly hired. Thus the worker over 45 who gets hired by a 
steel plant must have worked there before in nine cases out 
of ten, while for the worker over 45 who gets a job in other 
industries, it is about an even chance whether he has worked 
in, that plant before or not. 

Pension plans and group insurance reinforce the tendency 
of the companies to hire younger workers when they hire at 
all. The American Steel & Wire Co., a subsidiary of U. S. 
Steel, even included a drastic hiring age limit as part of its 
pension plan. 10 

In spite of this discrimination in hiring, however, the pro- 
portion of older workers in the force has been increasing 
rapidly in recent years. Average age may best be expressed 
by the use of the median. One-half of the steel workers are 
older and one-half younger than the median. It is estimated 
that the median age of all iron and steel workers in the 
United States increased about three years between 1910 and 
1930. It was roughly 33^2 years in 1910 and by 1930 had 
come close to 36^ - 11 Among the laborers, the proportion of 
workers over 45 nearly doubled from 1910, when they made 
up 13.6% of the total, to 1930, when they formed 26.8%. 
The increase has been almost equally striking among the 
highly skilled workers. In the large intermediate group also 
there has been a marked, if somewhat smaller, increase in 
the proportion of older workers. For the working force as a 
whole, it is perfectly evident that the proportion of older 
workers is much greater at the time of writing than it was 
a generation ago. 

In explanation, we may note the decline in the proportion 
of iron and steel workers under 20, and the increasing propor- 
tion of older men in the country as a whole, at least since 
1920. But these two factors taken together account for only 
a fraction of the change. 

The increase in the number and proportion of older work- 


ers has been made possible, as already noted, by a machine 
technique which has eliminated a large number of the most 
arduous jobs and introduced some easier ones. The introduc- 
tion of automatic sheet rolling, for example, has had and 
will have a great effect in increasing the proportion of sheet- 
mill workers over 45. 

Another factor in causing the increased average age of 
steel workers is the growth of legislation on old age pensions, 
and the companies' desire to avoid actions which would in- 
crease the pressure for such laws. In every large company 
there have been instances during the past decade of steel 
workers turned out on the streets without a pension, after 
they were too old to hope for employment elsewhere. But 
the companies have learned that such action raises a storm 
among the workers who remain, and increases the demand 
for a law that will give the workers more protection than any 
company pension plan. They find it safer and just as profit- 
able to retain the old worker at a laborer's pay. 

The big cause of the increasing average age of steel work- 
ers is the fact that employment has stopped expanding and 
has begun to contract. Among the immigrants of the pre-war 
period, there was a large proportion of workers under 30. 
The virtual stoppage of immigration during the war, the 
withdrawal of large numbers of young workers into the army, 
and the big 'war demand for steel forced the companies to 
relax their age limits and to hire more older workers. Since 
1924, there has been comparatively little movement of work- 
ers into and out of the industry, and the decline of turnover 
has made for a higher average age.* 

To-day, of course, the foreign-born workers are a rela- 
tively old element in the mills. Their median age is 42 or 43 

*The decline in turnover indicates that jobs in other industries are 
scarce, not that jobs in steel are more attractive. A boom period 
would undoubtedly cause a big turnover. In 1923, out of 790 Mexicans 
brought to Bethlehem (Pa.) in May, only 29% were still on the pay- 
roll of the company that brought them at the end of the year. 


years in the big categories of "laborers" and "operatives," 
and this compares with median age for native white laborers 
of 28 years, and for native white "operatives" of 31 years. 
Negroes have a higher median age than native whites in both 
categories, but especially in that of laborer, where their 
median age is 32 years, as compared with 28 for native 
whites. It will be shown below that Negroes have difficulty 
in getting promoted. In the group of "operatives," Negroes 
have a median age two years above that of the native whites, 
and this difference may also be accounted for by their failure 
to get promotion to the skilled group. 

The increase in the proportion of older workers has been 
greatest in the districts with declining employment. For 
example, in New Jersey, where the total number of steel 
workers employed was 13,811 in 1919 and only 8,056 in 
1929, 24.6% of the steel laborers were over 45 in 1920, and 
32.2% in 1930. Since 1930 the proportion of workers 45 
and over has probably passed a third of the total. A similar 
huge increase in the proportion of older workers in the New 
Jersey industry is shown for the other big class of steel 
workers, the "operatives," among whom 23.7% were over 45 
in 1920, and 29.4% in 1930. 

In the states with increasing or stationary employment, the 
proportion of older workers has increased also, but not so 
rapidly, in some states, as the increase of older workers in 
the population as a whole. 

The southern and border states show a much smaller pro- 
portion of older workers than the eastern and mid western 
states. In 1930 about 2J% of all the iron and steel laborers 
in the country were 45 years of age and over ; yet in Alabama 
the proportion was only 18.4% an d in Maryland only 13.7%. 
The low proportion of older workers in Maryland, as com- 
pared with Alabama, is due to the fact that employment was 
expanding in Maryland, where the number of workers in the 
industry more than doubled during the decade, while the total 


number of steel workers in Alabama actually decreased in the 
same period. The fact that both states have a relatively low 
proportion of old workers is due partly to the fact that the 
number of workers under 20 is relatively large, and partly 
to the smaller number of old people in the population as a 
whole. The tendency of experienced workers to seek out 
better-paying jobs in the North may also have had an in- 

There are differences in age between the different occupa- 
tion groups. In the steel industry as a whole, the median 
age for all laborers is 36^ years; for all "operatives," 34 
years. The explanation of the higher average age of the 
laborers lies partly in the character of the work. The "opera- 
tives" group includes the heavy piece- working jobs, or many 
of them; and old workers who cannot handle this work are 
apt to be dropped back to the labor gang, where they can do 
light cleaning-up jobs around the yard. 

Just as the proportion of older workers in the heavy indus- 
try is increasing, so the proportion of quite young workers 
in iron and steel is diminishing. In 1910 about one steel 
worker in eight was under 20 years ; the proportion of such 
young workers is now (1933) about one in 20. But the 
young workers under 20 attached to the industry still num- 
ber about 32,000, or more than the total of all workers em- 
ployed at the peak by the Republic Steel Corp., third largest 
raw steel producer in the country. 

Not all of the young workers have light jobs. Some of 
them practically do a man's work. 

I am only 18 [writes a Bethlehem tube mill worker from Mary- 
land] but I do not consider myself a youngster since I have been 
working at the Sparrows Point plant, for there they age one con- 
siderably, the worry of keeping a home on the poor wages paid 
and the rotten speed-up conditions. 

On some jobs the older workers cannot keep up with the 
pace, so young workers are pressed into service in their place. 


The Fabric Dept. is where the workers make reinforcements 
for concrete which is used on the highways and sidewalks. Here 
we have mostly young boys because the speed-up system is so 
terrible that the older worker could not very well keep up with 
the machines. . . . ("A Steel Worker" of Monessen, Pa., em- 
ployed by Pittsburgh Steel Co., Sept. 1931. Emphasis not in 

Steel is still a young man's industry. As compared with 
other iron and steel states, Pennsylvania has an unusually 
large proportion of older workers in the industry; but even 
so, steel in that state has a much smaller proportion of old 
workers than the manufacturing and mechanical industries 
as a whole. The contrast is especially striking in the older 
age groups. If we eliminate from consideration the working 
boys of 17 and under, and examine the remaining gainfully 
occupied male population, we find that in manufacturing and 
mechanical industries generally, the workers 55 and over the 
definitely aging workers were in 1930 14^/2% of the total, 
while in all occupations in all industries they were 16% of the 
total. But among the iron and steel laborers, workers of 55 
and over were 11% of the total, and among the iron and 
steel "operatives" (roughly the "semi-skilled"), the propor- 
tion was only 8^2%, or about one-half the average propor- 
tion for all workers in all industries. 

Negroes and Foreign-born 

The steel workers who were born in Europe and who to- 
day form part of the aging, settled population of the steel 
towns have gone through a cycle that has been repeated in 
each succeeding generation in the iron and steel industry. 
Each time that the industry has entered on a period of 
especially rapid expansion, a wave of immigrants has poured 
into the steel towns from the rural districts of the United 
States, of Europe, or of Mexico. During the war labor 
shortage, it was even urged (by Capt. W. R. Hunt at the 


November 1917 meeting of the American Iron and Steel 
Institute) that the government should import coolies from 
China, as the French government had already done. 

In each succeeding generation, the bosses have played on 
differences of nationality, religion, and race in order to make 
the workers suspicious of each other and keep them from 
uniting for the advancement of their own interests. 

What is to-day known as the "old" immigration consisted 
mainly of North Europeans, for the most part the Irish and 
Germans who came in such great numbers after 1848. About 
1880, when this wave of "old" immigration had died down, 
there set in a series of waves from southern and eastern 
Europe the "new" immigration. How well the bosses had 
learned the maxim of "divide and rule," even at this early 
date, is indicated by the following quotation from a letter 
written in 1875 by Capt. W. R. Jones, Carnegie's superin- 
tendent at the Edgar Thomson steel works in Braddock, to 
E. V. McCandless: 

My experience has shown [wrote Jones] that Germans and 
Irish, Swedes and what I denominate "Buckwheats" young 
American country boys, judiciously mixed, make the most effec- 
tive and tractable force you can find. (Emphasis not in origi- 
nal.) 12 

In 1910 no less than 58.1% of the steel workers were for- 
eign-born whites. The native whites made up 41. 8%. The 
proportion of Negroes was negligible, about .003%. Negroes 
had been brought to the midwestern steel industry, up to 
that time, for the purpose of breaking a few strikes, but 
otherwise had reached the midwestern industry hardly at all. 

With the shutting off of European immigration during the 
war all this changed. Many Negroes had their fares ad- 
vanced by the companies to induce them to come North. 
After the depression of 1921 came a final wave of Negroes, 
followed shortly, in the Calumet district of Chicago, by a 



wave of Mexicans, and after 1924 movement into the indus- 
try all but stopped. 

We may assume that races and nationalities in iron and 
steel are distributed at the time of writing (1933) about as 
they were in 1930. From the Census we learn that 58. i% 
of the steel workers are native whites, 31.3% are foreign- 
born whites, and 8.7% are Negroes. The other i.S% are 
mostly Mexicans. The proportion of native-born whites to- 
day is exactly the same as was the proportion of foreign- 
born whites in 1910. 


WORKERS, 1930 

(Source: Fifteenth Census of the U. S., Occupation Statistics, 
United States Summary, pp. 28-33.) 



Per cent of total 


born White 



Laborers, iron 
and steel 






iron and steel 






Rollers and roll 
hands, metal 






Negroes nowadays make up about a sixth of the laborers 
in the steel mills. Native-born whites and foreign-born whites 
(not including Mexicans) each make up about 40% of the 
laborers. The above table gives a fair idea of the dis- 
tribution in the so-called "productive" processes. However 
it does not present a complete picture of the industry. It 
covers only 378,864 men, and not all of the rollers and roll 
hands included in the table are in the steel industry. Of the 
136,000 who are omitted in this table, the bulk are main- 


tenance and repair men, craftsmen and their helpers. The 
table does show that in the "productive" processes the for- 
eign-born have moved pretty well up, since a quarter of the 
rollers and roll hands ("skilled" workers) are foreign-born. 
The native whites are not subdivided into those with native 
parentage and those with foreign or mixed parentage since 
this distinction is no longer as significant as it was ten years 

The distribution of races and nationalities in the present- 
day steel towns is very uneven. Residents in Allegheny 
County, Pa., will very likely tell you that the typical steel 
laborer is a Negro and the semi-skilled steel worker a Slovak. 
In Cleveland, on the other hand, the man-in-the-street prob- 
ably thinks of the steel worker as a Pole ; it is recalled that 
Poles were first brought into the industry there in 1882, when 
the Newburgh Steel Mills imported a gang of them to break 
a strike of Scotch and Welsh workers. 13 One hears of a 
colony of Greek steel workers at Weirton and of Finnish 
steel workers in Newcastle, while in Pueblo the steel laborers 
are mostly Mexicans, and in Birmingham they are nearly all 

In Allegheny County, Pa., the foreign-born (not including 
Mexicans, who are classified separately throughout) make up 
28.6% of all the men, with the Italians the best represented 
nationality. In the county as a whole, the Poles are as 
numerous as the Czechoslovaks, but a study of particular 
steel towns shows that the Czechoslovaks frequently out- 
number any other nationality. Over 7% of the men in the 
county are Negroes; the proportion in the steel plants is 
known to be larger. 

The proportion of foreign-born in Mahoning County, 
Ohio, is only 18.6%, as compared with 28.6% in Allegheny 
County. The Italians are most prominently represented 
among the foreign-born in the county, though not necessarily 
in the steel mills, where the Czechoslovaks, second most nu- 


merous nationality among the immigrants, show a tendency 
to congregate. 

Typical of the mid western steel towns in its racial com- 
position is Bellaire, Ohio, with slightly more than a quarter 
of its men foreign-born, and about 4% of its men Negro. 
Bellaire is also characteristic of the steel towns in that Italians 
predominate among the foreign-born. But Poles are the 
leading foreign nationality in Lackawanna, N. Y., and Gary, 
Ind., and in the steel districts of Cleveland ; Hungarians are 
most numerous among the immigrants in Bethlehem, Pa., and 
Ecorse, Mich., while the Jugoslavs lead in Steelton, Pa., 
Mansfield, Ohio, and Granite City, 111. The Czechoslovaks 
are most numerous in Johnstown, Pa., and Middletown and 
Lorain, Ohio. The steel towns in the border state of Ken- 
tucky have an insignificant number of foreign-born, and in 
this they are characteristic of the southern states generally, 
where Negroes fill the unskilled jobs in the steel mills. 

A few midwestern steel towns, such as Middletown, have 
less than 10% of foreign-born; while a few others, including 
Lackawanna, N. Y., and Aliquippa, Pa., have more than ' 
50%. Negroes make up over iS% of the men in Ecorse 
and 22% of the men in Steelton, but have not reached Granite 
City, 111., or Niles, Ohio, practically at all. Mexicans make 
up an important part of the working force in the steel mills 
of the Pacific Coast, Colorado and the Calumet district (Chi- 
cago and northern Indiana), but not elsewhere. 

There is nothing in the record to prove that the members 
of any race or nationality are better workers in steel than 
those of any other. Negroes showed their "efficiency" at 
the iron forges and furnaces of the South before the Civil 
War. Although they were slaves, they worked as well for 
the profits of their masters as the "free-born" whites. In 
the supplemental Report of the Richmond Commercial Con- 
vention of 1838, the Committee on Manufactures wrote, "We 
have in our peculiar labor [i.e., slave labor] the means of 


conducting the manufacture of pig iron more efficiently." 14 
Joseph R. Anderson, master of the famous Tredegar Iron 
Works of Richmond, Va., which were known as the largest 
southern iron works of the pre-Civil War era, said that it 
was the economy he made in employing slave labor for the 
worst jobs that enabled him to offer higher wages to skilled 
white men than they could receive in Pittsburgh. The slaves 
could be forced to work through the summer, when the whites 
refused to come to the furnaces. 

The bosses, true to their policy of "divide and rule/ 1 try 
to stir up national, religious and racial prejudices whenever 
the workers show a tendency to act together for their joint 
economic interests. As one defender of the employers, John 
B. Appleton of the University of Illinois, puts it, 

Most of the men employed in the rolling mills [of the Calumet 
district] tend to be Poles, the furnace men are largely Austrians, 
the railroad men Italian, etc. This has a disadvantage from the 
administrative point of view [read "from the employer's point of 
view"], in that the individual members of these groups tend to 
support one another and make it difficult to trace the cause of 
minor troubles. Consequently, efforts are made to mix the na- 
tionalities as far as it is practicable. (Emphasis not in original.) 15 

A steel mill executive in the Chicago 1 district said in 1928, 
"The nationality reports are useful in times of labor trouble, 
and we try to keep the different nationalities scattered." The 
purpose that lies back of the policy of getting in new races 
and nationalities came out very clearly in the following re- 
mark of the superintendent of a large steel products works, 

I got the colored pastors to send colored men whom [,wc] they 
could guarantee would not organize and were not bolshe- 
viks. . . , 16 

The race prejudice against Negroes is used by the em- 
ployers as a weapon to drive both whites and blacks still 
harder. The attitude of the steel employers is well illus- 


trated by the remark of an employment manager, also in the 
Chicago district, who said, 

We have Negroes and Mexicans in a sort of a competition with 
each other . . . 

In the South the Negroes still remain a subject people. 
It is almost unheard-of for a Negro to give orders to a south- 
ern white man; so even when the colored "millwright's 
helper" is teaching the trade to a white man, the white man 
is the millwright, receives the pay of a millwright, and is 
addressed as "boss" by his instructor. The highest-paid jobs 
open to Negroes in the southern steel mills are certain piece- 
working jobs; and the Negroes hold these jobs only so long 
as there is no concerted move by the whites to oust them. 

In the North it occasionally happens that a Negro directs 
a gang which contains some white men (usually foreign- 
born), and in a few isolated mills, most of the skilled jobs 
are held by Negroes. After the steel strike of 1919, there 
were for a time considerable numbers of Negro foremen. 
But such cases are exceptional. There are a few open-hearth 
steel mills where a Negro may rise as high as a first helper ; 
in most open-hearth works, however, advancement beyond 
the grade of second helper is simply out of the question. 

The Mexicans are apparently moving up in the scale of 
jobs more rapidly than the Negroes, and may end by jumping 
right past them, leaving the Negroes in the worst-paid and 
least attractive jobs even though the Negroes were first in the 
mill. In two large steel plants of the Chicago area, the Mexi- 
cans, who arrived later than the Negroes, have already a 
larger proportion of their total number in the "semi-skilled" 
jobs than the Negroes have. 17 At the time of writing, the 
Negroes still have more skilled jobs proportionately than the 
Mexicans, but it is a question how long they will hold their 
relative position. 


Wages, hours, and conditions of work of the steel workers 
will be discussed in the next three chapters. In this field no 
topic is more hotly controverted nor more generally misunder- 
stood than that of accidents and occupational diseases the 
worker's hazards from the job. We shall therefore examine 
first of all the employers' claim to have changed steel from a 
dangerous to a safe industry. 


"THIS MILL is too dangerous. We cannot allow women to 
visit," said the assistant safety manager at Jones and Laugh- 
lin's South Side plant in Pittsburgh. "Not even our nurses. 
We have two nurses and it would be a great help to them in 
treating accidents if they knew something of the processes 
at which the man had been injured, but we simply cannot let 
them in. You see, we have a lot of equipment that is out of 
date, lacks the new safety devices and is liable to break down 
at any time, causing serious accidents. It still yields a return 
on investment so the company cannot scrap it. Another thing. 
We are much too crowded here because we have expanded 
production without expanding the site area of the plant. The 
company has squeezed in new equipment beside the old until 
it is so thick it isn't even safe for the men who are working 
here. Those who have been with us a long time are used to 
it but new men are always getting into trouble. We have 
many more accidents than we would if there were a little 
more room. Of course it is cheaper to use the old plant as 
long as we can but we can't allow women to visit. Sorry." 
The assistant safety-manager smiled and turned to his desk. 

Two hundred and forty-two iron and steel workers were 
killed through accidents in the iron and steel industry in 
1930* I > 1 93 were permanently disabled, and 21,410 were tem- 
porarily disabled, making a total of 22,845 casualties. 1 For 
every thousand man-hours worked, 2.5 days were lost on 
account of accidental injuries. In frequency and severity, 
occupational diseases probably constitute an even greater 
menace to workers in the industry than accidents. 



The life expectation of the industrial worker, aged 20, is 
seven years less than that of one who enters a white collar 
or professional job, 2 and among industrial workers, the steel 
worker is subject to unusual risks. How grave are these risks 
and of what nature? To what extent are they avoidable? 
What are the bosses doing to avoid them? 

Mortality Rates 

The figure which shows the steel workers' risk of death 
from all causes, from accidents and diseases both in the in- 
dustry and outside it, is the mortality rate. In 1920 the 
mortality rate in iron and steel was nearly twice the rate in 
general manufacturing, according to the Prudential Insurance 
Co. of America. The Joint Occupation Study, prepared by 
experts for the insurance business in 1929, shows that the 
expectation of death is above average for all the principal 
occupations in iron and steel except machinists ; for laborers 
the most important occupation aumerically it is more than 
twice the average.* 

These high mortality rates are of course reflected in high 
life insurance premiums. At present, talk of purchasing life 
insurance would be a bitter joke to unemployed or part time 
workers who have not the means to purchase bread, who cashed 
in their policies for what they would bring and ate up the 
proceeds. Only a few of the more skilled steel workers can 
get life insurance at ordinary rates. "Semi-skilled" workers 
must in general pay 30 to 50% above the ordinary rates; 
common laborers, 55 to 100% above. A few iron and steel 
occupations are rated Special Class B (mortality expected to 
run between 205% and 250% of the "standard"). One 
steel executive, always hopeful of deceiving the public, said 
in 1928, "The average [iron and steel] mill worker to-day 
can buy life insurance at the same rate of premium as the 
office worker or other preferred risk." 8 When this statement 

* Detailed figures in Appendix I. 


was brought to the attention of W. N. Bagley, assistant actu- 
ary of The Travelers, Inc., he said simply, "It is not true." 
The Joint Occupation Study already referred to shows that 
accidental deaths for iron and steel workers are far above 
normal for mechanics, 396% of normal; for laborers, 
334% ; rollers and roll hands, 162% \ and "semi-skilled" 
operatives generally, 144%. The figures of the Metropolitan 
Life Insurance Co. indicate that violent deaths are one-fifth 
more frequent, relative to other deaths, for iron and steel 
workers than for workers in the average of other industries. 
This high proportion of accidental and violent deaths is due 
to the industry and not to accidents outside of working hours, 
as the Metropolitan study shows. 

Accident Severity Rates 

Mortality rates are only a rough measure of risk, since 
they take no account of non-fatal disabilities. Such disabili- 
ties are of two main kinds those due to accidents, and those 
due to sickness. 

The best measure of the accident risk in industry is the 
severity rate. This figure gives the number of days lost 
from accidents per 1,000 hours' exposure. The "time lost" 
from a fatal or permanently disabling accident is set at a 
figure supposedly representing all the time the victim would 
have worked during the remainder of a normal life, if he 
had not been prevented by the accident. 

From the companies themselves, which have every reason 
to minimize the hazards in iron and steel, comes statistical 
proof that the industry is unusually dangerous. The Na- 
tional Safety Council, a private organization which was set 
up largely at the instance of certain steel companies, gives 
figures extending through 1931 for 100 "units" of steel 
production and for 2,207 otner industrial "units." These 
show that the severity rate for steel exceeded the average for 


all classifications by 27% in 1929, by 22% in 1930, and by 
24% in 1931. 

The conclusion that steel making is more dangerous than 
most other industries, is corroborated by government figures. 
Out of 21 manufacturing industries, other than iron and steel, 
for which the U. S. Bureau of Labor Statistics has calculated 
severity rates, only nine have higher rates than iron and steel, 
and twelve have lower rates. 4 

The bureau has now decided to exclude from the record of 
the industry coke ovens operated in connection with steel 
works (which have an accident rate above the steel average) 
and also the erection of structural steel by steel manufactur- 
ing plants (one of the most dangerous jobs in all industry). 
5At the same time, several new departments of the steel indus- 
try, all of which have lower accident rates than the average, 
have been included in the general figure beginning with 1930. 
The effect of these omissions and inclusions, at least some of 
which must appear arbitrary, will be to cause the steel rate 
to appear lower in future by comparison with other in- 
dustries. 5 

Severity rates have been calculated for so few industries 
outside of iron and steel, and for so few plants in those 
industries, that we may well look further for a measure of 
the relative hazards in steel. We find it in the high premium 
that the industry pays for compensation insurance. This 
premium is proportional to the compensation actually paid in 
the years immediately preceding, and so to the accident risk. 
In data for Pennsylvania (which contains a third of the heavy 
industry), as in the national tables compiled by the National 
Council of Compensation Insurance, the iron and steel indus- 
try has an exceptionally high rate.* 

* See Appendix II. 


Accident Rates by Departments 

The accident rate for the industry as a whole is indeed 
high, but the average for all departments gives little idea of 
the appalling risk in certain branches. In the open hearth 
department in 1929, the rate was 77% above the average for 
the whole industry. For the years 1925-1929, the rates for 
the several production departments were as shown in the 
following table. 


(Source: Monthly Labor Review of U. S. Bureau of Labor 
Statistics, April, 1931, p. 96.) 

Severity rate 
(days lost per 
Department 1 ,000 hours' exposure) 

Open hearths 4.6 

Blast furnaces 4.2 

Bessemer converters 4.2 

Foundries 3.0 

All departments 2.6 

Plate mills 2.6 

Heavy rolling mills 2.1 

Sheet mills 1.6 

The high rate of accidents in the blast furnace department 
is due chiefly to cases where the furnaces break out and kill 
one or all of the crew by burning them to death. In 1926 a 
blast furnace of the plant of the Woodward Iron Co. in Ala- 
bama poured 400 tons of molten iron onto its crew, and 21 
workers were killed. Such breaking out may be caused by 
unskillful operation on the part of the blow boss, or by the 
desire of the company to get the last bit of use out of the 
furnace before blowing it out and relining it. 


In the yard department, where the workers are mostly 
laborers, the most frequent cause of accident is getting hit 
by a power vehicle, such as a dinkey engine. The writer was 
hit in the nose by a dinkey engine in a steel-works yard in 
1924. A foreign-born steel worker once described the sensa- 
tion of the victim of a railroad accident very well as follows : 

"No choo choo ! No ling ling ! No God damn you get out 
of the way ! Just run over 1" 6 

Overhead cranes are used more or less in all departments, 
and many of the accidents due to falls and to falling objects 
are attributable to them. 

Accidents caused by falling objects are relatively more fre- 
quent in the open-hearth department than in any other except 
fabricating. Machinery is a special hazard in the open hearth 
and fabricating departments, and the open-hearth workers are 
also exposed to burns, perhaps especially the pitmen who 
clean up after tapping. 

A fairly common source of injury in the rolling mill depart- 
ments results from hot metal jamming in one of a series of 
rolls. Under these circumstances the red or white hot metal, 
called a cobble, is likely to strike any worker within range. 

Electrical workers have the hazards of live wires and of 
falls from poles. Handling tools and materials is a frequent 
cause of accident in most departments, and it is from this 
source that the relatively "safe" sheet mills may expect more 
accidents relatively than any other department. There is a 
special reason why the sheet mills, for example, should show 
a low accident rate. The work at the rolls and furnaces is so 
arduous that the workers have to spell each other off, and 
at any given time only one-half to two-thirds of these work- 
ers are actually handling the materials. 

Publicity and the Accident Rate 

r A generation ago the steel companies showed such flagrant 
and criminal carelessness in the operation of their plants that 


liberal writers exposed them. In the campaign which began 
in 1906 and resulted, after 1910, in the enactment of state 
compensation laws, the steel industry was featured. The 
U. S. Steel Corp. undertook to reduce the accidents in its 
plants and succeeded to an extent which it has taken great 
pains to advertise. Other companies followed suit. 


(Source: Monthly Labor Review, November, 1931, pp. 27, 31.) 

Year (all departments) 

I9<>7 7-2 

1907-1911 5.0 

1912-1916 , 3.7 

1917-1921 3.4 

1922-1926 2.8 

1927 2.3 

1928 2.2 

1929 2.6 

1930 2.5 

The rate for 1931 was calculated on a new base. It was 
slightly lower than that for 1930, the reduction amounting to 
eight-tenths of one per cent of the 1930 rate. 7 The reduc- 
tion in accident rates since 1907 is partly fictitious owing to 
the growth of the practice described below of forcing injured 
workers to come to the plant. Nevertheless there has been a 
marked reduction. 

Company apologists often cite the reduction to show the 
humanitarian character of the U. S. Steel Corporation and its 
fellows. They would do better to keep the statistics as secret 
as possible. The fact that the companies could reduce the 
accident rate so sharply constitutes a terrible indictment of 
conditions prevailing in the earlier period. The worker who 


had his arm wrenched off in the rolling mill, the widow whose 
man was buried in an overflow of molten metal, may read in 
these figures that the accidents which broke their lives might 
never have occurred if only the pressure of publicity and 
threat of compensation laws had been applied a little earlier. 
The union organizer may reflect upon the greater reductions 
which would have followed a mass movement of the workers. 

Safety and Profits 

From the safety campaign, which was started in 1906, the 
steel companies have realized certain concrete advantages. 

Expenses have been reduced. Steel officials point out that 
accident prevention pays in dollars and cents. 

To-day accident prevention is just as much a business proposition 
as production [says the vice-president of a U. S. Steel Corpora- 
tion subsidiary]. Absence of workers, due to injuries, causes 
changes in personnel requiring the hiring and training of new 
men. The bare cost of hiring a new man will run from $30 to 
$80. Such accidents disrupt the morale of an organization. . . . 
Every accident prevented means a saving of just so much in 
compensation and necessary medical care and attention. ... A 
large steel works employing 5,000 men cut compensation costs 
from $24,378.89 in 1926 to $10,407.45 in 1927, showing a saving 
of $13,971.44. These figures do not include savings due to de- 
crease of medical and hospital services. ... It is said that the 
U. S. Steel Corporation spent $9,763,063 in safety work in 10 
years and showed an actual saving of $i4,6o9,920. 8 

The American Rolling Mill Co. reminds its foremen, 
"Every accident causes a loss of production." An accident 
may cause injury not only to life and limb, but to expensive 

Blaming the Workers 

The safety movement has made it easier for the companies 
to blame the workers for every accident that occurs. 

Shifting the blame for accidents has always been part of 


the companies' policy. A safety technician once charged 
openly in a meeting of the National Safety Congress that the 
Illinois Steel Co. (U. S. Steel subsidiary) used to employ a 
photographer for this particular purpose. It was the photog- 
rapher's job to visit the scene of each accident and fix up a 
picture which would show that the company had not been to 
blame. 9 Or take a more recent example : 

At 1 1 o'clock at night in the steel mill we suddenly heard a ter- 
rible cry, after a crash (a 40,000 Ib. load had fallen down). Dust 
covered up the place like a thick fog, and we could not see any- 
thing. For a few seconds we heard the heart-rending cry and 
then all lapsed into a deep silence. 

We all trembled and stood speechless for a few minutes, around 
the bloody mass of flesh and bones. The worker's blood sprinkled 
the whole place. The sharp corner of the load had torn open his 
stomach and the internal organs were ripped out. 

They immediately began to discuss whose fault it was. First 
the bosses blamed it on the man who was killed, then on other 
workers. . . . (From a letter written by a sheet steel worker of 
Niles, Ohio, an employee in the Thomas mill, August, 1929.) 

The new technique of accident prevention includes the ap- 
pointment from among the workers of "safety committees," 
whose identity is sometimes kept secret from the other work- 
ers. The men selected are "safe" in every sense. They can 
usually be counted on to "cooperate" with the company, and 
incidentally to pass on information about what is happening 
among the other workers with reference to union organiza- 
tion and the like. These men are filled with the company 
point of view on accidents. They are shown how hard the 
company works to prevent accidents, and how careless the 
workers are. This point of view they are expected to spread 
abroad in the mill, as the foremen and other bosses also con- 
tinually do. 

The safety work thus offers one more opportunity for the 
bosses to try to split the ranks of the workers and set them 
against each other. No company ever carried this policy 


farther, in all probability, than the Newport Rolling Mill Co, 
of Newport, Kentucky (now a part of the American Rolling 
Mill Co.), which formerly had a safety "court" in which the 
workers were tried, and fellow employees acted as prosecuting 
attorneys. 10 The jury system, however, has not shown any 
tendency to spread. Jones & Laughlin once had a somewhat 
similar system and abolished it. A jury of workers might 
some time find the company guilty of criminal negligence, 
and that would never do. It is more prudent for the com- 
pany to leave the reporting of accidents to "loyal workers" 
who will take the company's viewpoint as their own. 

Even committeemen admit that some of the rules the com- 
pany makes cannot be enforced. A worker at the Ensley 
plant of the Tennessee Coal, Iron and Railroad Co., who had 
been a safety committeeman for years, once told the writer 
that if all the safety rules were observed, production would 
be greatly slowed up. He himself commonly disregarded cer- 
tain rules. Then why have the rules ? Unenforceable safety 
rules can have only one use to shift the blame from the 
company which makes the rules to the worker who is charged 
with disregarding them. It often happens that a boss di- 
rectly orders a worker to do something which is contrary to 
a safety rule. This leaves the worker a simple choice to 
break the rule or to be fired. 

Company statisticians have compiled tables attempting to 
show that most accidents are due to the recklessness of the 
workers themselves. Acting on the same theory, the Jones 
& Laughlin Steel Corp. (for example) holds some one indi- 
vidual responsible for every accident that occurs, and that 
individual is disciplined, usually by being laid off for a time. 
If it is the injured worker himself who is "responsible," then 
he is disciplined. The exception is if the worker happens to 
get killed. Then his buddy, or the one who was nearest at 
the time, is apt to be selected for layoff. For example, in 
1929 two laborers were working at night on the dock at 


Aliquippa. One of them fell into the river and was drowned. 
His companion, who could not swim, ran for help. Later 
the companion was disciplined for the accident. This case, 
and others like it, were too much even for the safety director, 
who handed in his resignation. 

Sometimes the majority of the workers on a given job are 
disciplined in succession for an accident that keeps recurring. 
Obviously that is a clear case of mismanagement, for which 
the workers are being made to suffer. The workers in the 
open-hearth department of the Bethlehem plant at Sparrows 
Point report an instance where So% of the first helpers were 
penalized within a year by being demoted or laid off for a 
week or two, the reason being that the steel had broken out. 
But, said the workers, the reason the furnaces broke out was 
that the company was trying to save money by using, for bot- 
toms and walls, raw dolomite the cheapest material avail- 

For the company, it is a good policy to shift the blame onto 
the workers. It is much easier to deal with the state factory 
inspectors when they can be shown that the company is not 
to blame. The following incident was related to the writer 

by a certain Jack H , a craneman in the Cambria plant of 

the Bethlehem Steel Corp. at Johnstown: 

In my old crane, I had to look out the side to get a clear view 
of the floor and avoid obstructions. The safety committee visited 
the crane and one member remarked, "Gee, we can't hold Jack 
responsible if anything happens; you can't see a thing up here." 
(The safety committees have power to make recommendations, but 
not to enforce them. H. B. D.) Next week I bumped a pile of 
rods off the top of a shed, and knocked them onto a couple of 
laborers, cutting off the legs of one. In the investigation before 
the factory inspector, the super stood right by me and stepped on 
my foot, whispering, "Don't say too much before this fellow." I 
said I was going to talk because I was in the right, and I told 
my story. 


Jack H , a skilled man, was not fired. But many workers 

are afraid to talk freely in the presence of the bosses. It is 
the settled policy in all companies, so far as is known, to 
avoid the situation where a worker confronts his boss and 
blames him directly for an accident. 

Apologists for the companies either pass over this feature 
of the safety program (which varies little from company to 
company) or lie about it. Arundel Cotter writes in United 
States Steel: A Corporation with a Soul ( ! !) : 

The Steel Corporation . . . compensates for [accidents] without 
a question as to where the blame lies. (Emphasis not in orig- 

A cooler example of misrepresentation would be difficult to 

The companies' "safety education/' which is carried on by 
a variety of means, from pamphlets to pep meetings on the 
men's own time, is based on the theory that the workers are 
careless. The companies try to give the impression that their 
safety campaigns have been mainly responsible for the big 
drop in accidents. But their safety "education" is largely a 
waste of time, according to former N. Y. State Industrial 
Commissioner Frances Perkins. 12 A friend who has been 
attached to the industry for some years and who has talked 
to hundreds of workers in the principal midwestern centers, 
goes much farther. He writes : 

The "safety" meetings are almost universally used to speed up 
production. The men are openly threatened at these meetings 
with "hurry up or get out." They are also given more talks on 
loyalty to the company than on accident prevention. 

Safety and the Machine 

New processes bring hazards against which the workers 
are often in no position to guard themselves. Early in 1926 
the Illinois Steel Co. finished installing a quarter of a million 


dollars' worth of new equipment in its by-products plant at 
Gary, Ind. On June 14 occurred an explosion in this plant 
which killed 15 workers and injured 60. The company im- 
mediately posted guards at the plant and excluded all re- 
porters except from the Gary Post-Tribune, whose attitude 
was known to be "sympathetic" to the management. The 
cause of the explosion was never definitely determined, or 
even adequately investigated. 

Nevertheless, experts believe that most of the credit for 
accident reduction should go to new machinery. This con- 
clusion will surprise the layman who looks on the machine 
as constituting a danger to life and limb. In certain cases of 
course the new machine is more dangerous than the old 
process. But in iron and steel, the greater the improvement 
in machinery and the more automatic the process of pro- 
duction becomes, the farther removed is the individual 
worker from contact with the hot metal, poisonous gases, and 
moving rolls. For example, one/ of the most dangerous jobs 
in connection with the old-style blast furnace was that of the 
top-filler (the worker who took the wheelbarrows of ore, 
coke, and limestone from the top of the elevator and dumped 
them into the top of the furnace). When the charge inside 
the furnace slipped, as it sometimes did, the furnace top 
would vomit forth clouds of gas and flame and red-hot coke, 
often killing the fillers who were nearby. Or the slow leak- 
age of carbon monoxide gas might result in the filler being 
overcome before he realized it. Even to-day, oilers go to the 
top of the furnace only in pairs. Mechanical charging elimi- 
nated the job of top filler. There are to-day only two or 
three hand-charged furnaces in the United States, and the 
accident rate on blast furnaces has dropped accordingly. 

Speed-up versus Safety 

However in spite of mechanical improvements the reduc- 
tion in the accident rate is slowing up and may have stopped. 


A study of the table given on a previous page shows that 
there has been no great change in severity rates since 1925 
(the rate in that year was as it happens the same as in 
1930, 2.5). For this lack of advance there are two main 
reasons, both of which will tend to persist as long as capi- 
talism lasts. 

Speed-up is the first and great obstacle to accident reduction. 
Indeed, speed-up is the very opposite of safety work. In the 
little plants especially, accident rates have tended to rise,, 
both absolutely and relatively to the big plants, because of 
speed-up. The smaller plants do not have the possibilities of 
installing automatic equipment that are open to the ten- 
million-dollar corporation. But in the big companies too, the 
"drive system" causes accidents. A few illustrations follow : 

Some of the speed-up in National Tube Co. [U. S. Steel sub- 
sidiary] in McKeesport: A worker was doing two jobs while at 
work. He was working the levers on a machine. While work- 
ing on the levers he had to leave the levers and run over to the 
crane and hook a cart. While he tried to get over there in a 
hurry the levers caught his clothes and spun him around and 
threw him in a hole 80 feet deep. 

The workers couldn't get him through the same hole but had 
to go through a sewer to get him. The company doctor says that 
if he pulls through he will be insane. 

The daily newspaper of McKeesport tried to get the news and 
the doctor told the reporter that there was no accident wanted 
it to be kept secret. ("National Tube Worker/' in Labor Unity, 
April u, 1931.) 

On February 3, a worker was electrocuted. He was in the 
power house doing carpenter work, putting doors on a new switch 
board. The boss yelled to him to leave his job because he had 
another hurry-up job for him to do. The worker opened one of 
the doors in the switch board to put away some screws he had in 
his hand before rushing to the other job. In his hurry he opened 
the wrong switch board one which had the power on. He 
touched a 6500 volt wire and was killed. If the worker had not 
been rushed off his job into another one, he would not have been 


killed. If the switch board had had a safety lock on it, the worker 
would not have been able to open the door. (From Tube Worker, 
shop paper issued by the Communist Party nucleus of the Youngs- 
town Sheet & Tube Co., March 1930.) 

"Whenever I raise a load," a crane man told me, "I always 
pray that no one will get hurt, because I do not have time to lift 
the load slowly as it will take three times as long and the boss 
fires us if we take time, and do things the safe way." ("L. N.," 
from Niles, Ohio, mill of Thomas Sheet Steel Co., subsidiary of 
Empire Steel Corp., August 1931.) 

The other big obstacle to 100% safe operation is that the 
companies admittedly do "safety" work because it pays, and 
slow down and stop if and when they are convinced that it 
no longer pays. The workers know this ; and they also know 
that the company will abolish unsafe practices only when and 
if it sees fit. Some bosses even resent having the workers 
make suggestions about safety. For this reason, workers 
usually find it more prudent to keep silent. 

There is of course a way of getting around this difficulty 
in part even under capitalism. In some European countries 
the unions virtually control the appointments of government 
factory inspectors, or have done so at times. A strong union 
with some control over inspection can do much to protect the 
worker who makes suggestions. Full collaboration of the 
workers in safety work will presumably not be secured until 
the workers exercise full control. 

Doctors and Compensation 

Workers have many grievances against the company doc- 
tors, whose services in some states they are compelled to 
accept. The service is apt to be of inferior quality and bru- 
tally administered. Steel workers of Indiana Harbor still 
speak with deep disgust of Major Hamilton, recruiting officer 
for the Indiana National Guard, who used his position as 
company doctor for the Inland Steel Co. to get workers into 


the National Guard. That company doctors are liable to 
abuse their position is recognized in some state laws which 
give the injured worker his choice of doctors. But this free- 
dom of choice is for most steel workers either non-existent 
through failure to provide it in the law, or purely nominal. 
When injured workers are forced under threat of discharge 
(as they often are) to come to the plant and "draw their 
time" so as to give the company a good accident record, one 
of the main purposes of the compensation laws is defeated. 
In one part of one plant (Jones & Laughlin South Side plant, 
Pittsburgh) no less than six accident victims were observed 
during a single shift, who were able to walk but not to work 
and who were evidently under instructions to come to the 
plant every day until well. Some workers are browbeaten 
into accepting lump sum payments, forced back to work ahead 
of time, or denied compensation altogether. When a big 
company decides, in any particular case, that it is not going 
to pay compensation, it is able to employ the best legal talent 
to uphold its position. The unorganized steel worker gen- 
erally is forced to accept the company's decision on whether 
he has compensation coming or not. The worker who takes 
his claim to the state referee may expect to be fired and 
never reemployed. 

Most of the big companies are self-insurers, and handle 
the beating down of claims themselves, but the situation is 
no better for the worker when the compensation risk is in- 
sured with a commercial insurance company. These con- 
cerns are of course experts at beating down claims, and they 
furnish inferior medical service as a rule; indeed, some of 
them have made compensation practice into a kind of racket. 
Among the important steel states the only ones which defi- 
nitely exclude the possibility of insuring the compensation 
risk in commercial companies are Ohio (with an exclusive 
state fund) and West Virginia. 


Occupational Diseases 

The sickness risk in steel is bigger than the accident risk. 
Excess deaths from pneumonia alone were nearly as numer- 
ous in the industry in 1929 as all deaths from accidents ; and 
the severity rate for non-fatal cases of sickness has been 
higher than the severity rate for non- fatal accidents in the 
only steel plant which is known to compile sickness severity 
rates, Middletown plant of the American Rolling Mill Co. 18 

There is no indication that the hazards from sickness are 
declining. New jobs bring their own hazards to health. Since 
alloy and tool steels are coming into increasing use, the fol- 
lowing quotation from the Iron Age is of special interest : 

Quenching temperatures for alloy and tool steels have been 
steadily rising during the past ten years. . . . 

Higher temperatures . . . put a greater strain upon the heat 
treaters themselves; but it almost seems that they have been the 
last factor to receive consideration. One would imagine, on en- 
tering some heat treating departments, that the management must 
think these skilled members of the organization are birds like the 
fabled phenix, which flew out of the altar fire with never a tail 
feather singed. Else why would any one install heat-treating 
equipment operating at somewhere up to 2500 F., blowing off 
white-hot furnace gases into a work room already superheated 
by a blazing summer sun? We find such operations in plants 
where it is evident from the variety of equipment, labor-saving 
devices and quality of work done, that much thought has been 
given to this important operation. Yet the men all have "sun 
burned" noses and cheek-bones. (Emphasis not in original.) 14 

The Iron Age goes on to point out that these conditions are 
really not defensible on any ground, since means have been 
discovered, and are actually in use at some plants, to exhaust 
the gas by means of a hood and suction fan. 

Nearly every department has its special dangers to health, 
many of them hard to locate. There is the risk of conjunc- 
tivitis (inflammation of the eye), due to heat, sand and dust; 


of heart disease, from which men may drop dead at work ; 15 
of "hammer-man's paralysis" of arms, due to use of heavy 
sledges; of "striker's arthritis" (rheumatism) of wrists and 
elbows, due also to hammering, or to holding vibrating tools ; 
of "boilermaker's deafness," and of ferro-silicon poisoning. 
All of these diseases are listed by Hayhurst as occupational 
diseases of iron and steel. 16 

The list compiled by Hayhurst, although the best available, 
is far from complete. Workers continually report ailments 
which, though well recognized among persons in the indus- 
try to be connected with the occupation, have not yet found 
their way into official reports. There are convulsions of the 
arms and feet among men doing excessively hot work ; boils 
and pimples, occurring on the bodies of oilers who get greasy 
and wet at the same time; "kidney trouble," said to affect 
most of the young workers in a particular department of 
the Sparrows Point plant ; and many others. These instances, 
reported by untrained workers, cannot be waved aside; un- 
trained workers long ago detected and complained of the 
danger from diseases, such as pneumonia, which are now 
definitely classed as occupational. 

Three types of disease, peculiarly associated with iron and 
steel production, include most of the serious cases. These 
are carbon monoxide poisoning, ailments traceable to heat 
exposure, especially "hot-mill cramps," and pneumonia. 

Carbon monoxide poisoning is dangerous chiefly because it 
creeps on the workers unawares. The gas is difficult to detect 
and workers usually do not notice it. "Gassing" produces 
chronic symptoms such as headaches, dizziness, vomiting, 
coated tongue, anemia, palpitation, insomnia, general debility 
and mental dullness; chronic gassing may cause depressive 
insanity. An excessive dose will cause the subject to fall 
unconscious, and he will soon die unless rescued. 

"Hot-mill cramps" is the disease most feared in the steel 
mills by workers on hot jobs. It is not the only disease that 


is caused by exposure to excessive heat, but it is the worst. 

Scientists say that men can work safely in the mills as 
long as the effective temperature is not higher than about 80 
Fahrenheit. With an effective temperature higher than 85, 
the body loses its heat equilibrium and physiologic reactions 
continue to increase with length of exposure. Yet some steel- 
workers are repeatedly exposed to temperatures as high as 
220 F. In tinplate rolling mills the rollerman and "be- 
hinder" usually stand in temperatures of from 100 to 120 
F. working laboriously in the face of radiant heat from the 
furnaces and plates. 

It is especially in the sheet and tinplate rolling mills that 
hot-mill cramps are likely to develop. The ailment may be 
local, affecting only one part of the body, or it may be so 
general and intense as to cause death. It is so painful that 
in severe cases doctors sometimes inject cocaine, with corre- 
sponding danger to men having weak hearts. Workers who 
have had the cramps several times are often incapacitated for 
further work in the hot-mill. Under the present menace of 
unemployment workers cannot risk their jobs by laying off 
when they feel the cramps coming. During one hot spell in 
late July and early August of 1933, the Associated Press 
reported from Charleroi, Pa., that 127 workers there were 
overcome in a single shift; while a worker wrote in from 
Sparrows Point that in the Bethlehem Steel Corp. plant there 
six steel workers had died in a single week. 

All week [added this worker] men had been passing out from 
heat-cramps. Nearly 250 of them walked or were carried to the 
dispensary, and when the dispensary beds were full, the sick 
workers were laid out like cattle on the grass. (Daily Worker, 
August 5, 1933.) 

The new patented continuous and semi-continuous sheet 
and strip mills have involved some workers in increased risk 
from hot-mill cramps. Rests between heats have been abol- 


ished, in some mills, especially those on 6-hour shifts, and 
men who work around the furnaces say that they get the 
dreaded cramps more frequently than before. In some plants, 
they are fired if they go home with the cramps. The result 
is that they work until they drop, and even then there is no 
guarantee that they will be carried out. 

At the Weirton Steel Mills, in West Virginia, we are not 
allowed to quit no matter how sick, until we fall down. The 
result is that in the last two days no less than 45 men have been 
carried out of the mill on stretchers. From the tin mill alone 25 
were carried out within 15 hours. (From a worker employed by 
the Weirton Steel Co., subsidiary of the National Steel Corp., 
July, 1931.) 

Over 3,000 tons of sheet iron has to be produced every week 
at the Sheet Mill Dept. Most of the workers sweat over fire and 
gases in the hot mill. Three workers were so fatigued they fell 
down and they were brought to the hospital. One of them in 
particular, a doubler on No. 2 had been unconscious for several 
hours before anybody noticed him. ("Metal Slave," employed by 
Bethlehem Steel Corp. at Sparrows Point, May, 1931. Emphasis 
not in original.) 

So tired do the workers sometimes become that they fall 
asleep in the line waiting for their pay. 17 Their resistance to 
disease is decreased by fatigue. 

Workers who escape the cramps are liable to have their 
health slowly undermined by excessively hot work. They 
become "susceptible to disease and invariably suffer from 
anemia and muscular and joint pains which eventually induce 
premature old age." 18 Heat may also cause apoplexy (heat 
stroke), heat exhaustion, or heat diarrhoea, and those exposed 
to white heated metals are subject to cataracts (an eye injury 
which requires an operation to remove the lens). Exposure 
to heated metals also causes "sun burn" of arms, hands and 
face ; further, small hemorrhages may develop under the skin 
of the face. Callouses develop in the feet of men who walk 


over hot iron plates, and hands may also become severely 


Pneumonia is the worst scourge of the steel workers. 19 
Industrial workers get pneumonia on the average, at the rate 
of 25 or 30 per year per ten thousand workers. Among steel 
workers one may expect 44 cases per year per ten thousand. 
It may be calculated that the excess pneumonia deaths in the 
industry, above the normal expectancy for occupied males, 
amounted in the year 1929 alone to more than 2OO. 20 This 
compares with a total number of deaths from industrial acci- 
dents in the industry of 304 in 1929 and 229 in 1928. Dis- 
cussing the pneumonia hazard, the U. S. Public Health 
Service states that "only a few problems in industrial hygiene 
merit more urgent attention." 

Steel towns generally have high mortality rates from 
pneumonia. Such typical steel towns as East Youngstown, 
Ohio, and Braddock, Pa., have rates more than three times 
as high as the rate for all cities in the registration area. 
Pittsburgh has for years reported one of the worst death 
rates from pneumonia among the large cities of America. 
Other steel towns reporting rates at least half again as high 
as the average for cities are Carnegie and Johnstown (Pa.), 
Gary (Ind.), Pueblo (Col.), and Duquesne (Pa.). 

The high average rate in steel towns is due, in the opinion 
of experts, not to chance but to the steel industry. The 
U. S. Public Health Service has carried out a detailed study 
in a certain Pennsylvania town where steel is manufactured, 
using records of the sick and death benefit association of a 
large steel company. The investigators tried to account for 
the high rate of pneumonia among steel workers by reference 
to such factors as seasonal variations in frequency of the 
disease, influenza epidemics, economic status, age of the men, 
their nationality, extent of addiction to alcoholic stimulants, 


and prevalence of pneumonia in the community. All these 
factors together were insufficient to account for the steel 
workers' susceptibility to pneumonia. It was found that 
women in the community had a higher pneumonia rate than 
women in cities generally, indicating a community as well 
as an occupational risk; but the rate for the men was about 
twice that for women. 

Hot jobs carry an exceptional risk from pneumonia. Pro- 
fuse sweating followed by sudden cooling is characteristic of 
the work of men in several departments. The hot jobs are: 
cast-house keepers and helpers in the blast-furnace depart- 
ments (this group caught pneumonia 13 times as often as the 
general run of workers not subjected to any exceptional ex- 
posure) ; the oven heater and some laborers at the coke ovens ; 
the melters and their helpers in the open-hearth, and also the 
bricklayers and mechanical repair men, who must go into a 
furnace before it is cool to repair and rebuild it ; and in the 
rolling mills, bottom makers in the soaking pit section and 
heating furnace workers, rollers, shearmen, helpers and 
hookers. The plant studied apparently had no sheet mill, 
so the hottest jobs of all those in the steel industry were not 

Previous English studies had shown that workers with 
"hot jobs are especially subject to rheumatism and pneumonia, 
and apparently also to other respirator}- diseases. 21 It was 
a surprise, however, to find that in the American plant 
studied, the workers who had to work outdoors in all kinds 
of weather, not on hot jobs, were even more subject to pneu- 
monia than the workers on the hot jobs already mentioned. 
Most of these workers were employed in the general labor 
department, which accordingly had a high pneumonia rate. 
Work involving exceptionally strenuous labor, and exposure 
to dust, gases and smoke, was shown to be work on which 
pneumonia occurred more often than normally, but not as 
often as on hot or outdoor work. 


STEEL PLANT, 1924-1928* 

(Source: U. S. Public Health Service, Bulletin 202.) 

Annual number 

of cases of 
pneumonia per 
Industrial exposure b to 10,000 workers 

One or more conditions c 121 

None of these conditions c 39 

Inclement weather only 136 

Heat with wide changes in temperature (no 

other hazard) 126 

Other conditions d 106 

* Employees of the mines omitted as well as those in departments in 
which no observations were made. 

b Includes slight or occasional as well as heavy exposure. 

e Conditions are : outdoor work in all kinds of weather, exposure to 
heat with wide changes in temperature, strenuous labor, dust, gases 
and smoke. 

d Exposure to one or more of the conditions named in footnote c, 
but exclusive of exposure only to inclement weather, and only to heat 
with wide changes in temperature. 

The number of men included in the study was sufficiently 
large to make the results statistically significant. In the case 
of the workers who had to work outdoors in all kinds of 
weather, it was calculated that the odds were several millions 
to one against the possibility of such a high pneumonia rate 
occurring as the result merely of chance. 

Other respiratory diseases are of no more frequent occur- 
rence among American iron and steel workers than among 
other groups of occupied males, except in certain localities. 22 
But the mortality from all respiratory diseases, not only pneu- 
monia, is much heavier among iron and steel workers than 
among all occupied males. 23 A possible explanation is that 
when steel workers get a respiratory disease, they get it bad 
a conclusion which is supported by the very fact that pneu- 


monia is so much more characteristic of the industry than the 
milder respiratory diseases such as bronchitis. Another pos- 
sible explanation is that steel workers, being an unusually 
strong and healthy group as a whole, do not contract respira- 
tory diseases as often as the average occupied male, except 
when they are in peculiarly exposed occupations. Both fac- 
tors probably have an influence. 

The experts of the Public Health Service remarked that 
"men perspiring freely after a bout of heavy work in front 
of the open-hearth furnaces were observed changing clothes 
while standing in a direct draft; others went home without 
changing their clothes though they had become wet from 
perspiration." The responsibility for the excess pneumonia 
deaths in the steel industry rests squarely on the steel com- 
panies which have failed to provide change houses, shelters, 
and hot and cold showers. 

Since occupational diseases are compensated under the 
workmen's compensation laws only in a few states, and 
pneumonia not in any of these, we would not expect to find 
that the steel companies had taken active steps to combat 

In fact, the employers' indifference to the occupational dis- 
ease problem is quite as striking in its way as the intense 
excitement shown by the big companies concerning the safety 
movement. If they had to pay state health insurance pre- 
miums, as well as workmen's compensation, the attitude of the 
companies would be different. As it is, precautions against 
the probable effects of hot or exposed work are rare. Forced 
air blasts blowing fresh cold air over the heads of furnace 
workers have been introduced by only a few companies, and 
there apparently with a view to increasing the men's produc- 
tion. Yet in England, already before the war it was the rule 
in the tinplate trade for fresh air blown by fans to be de- 
livered at the hot working places near the rolls and furnaces. 
The rank and file of the unions in the tin-houses had com- 


plained about the heat, fumes and dust, and had forced action 
from their officials, who sought and obtained a conference 
with the employers and factory inspectors at which certain 
improvements were agreed upon. 

The next question we shall examine is that of wages. 
What has been the wage rate and what the actual earnings ? 
How has the living standard of the steel workers compared 
with that of the workers in other industries? 


IT is a persistent boast of the big steel employers that 
steel wages have been high. This statement has been given 
so much publicity from the platform and in the business- 
controlled press, that many people who ought to know better 
have come to believe it. In this chapter we shall apply tests 
to the steel wage by a number of different methods, and see 
how the claim stands up. Of course, it is unnecessary to 
state that the steel companies have at no time paid any 
higher wages than they thought they had to. 

The common-labor wage rate of the U. S. Steel Corp. is 
the most important single wage rate in American industry. 
When the U. S. Steel Corporation directors decided to cut 
wages 10% as of October i, 1931, they were decreeing a 
reduction of about this amount for perhaps two million wage- 
earners, not more than half of whom were in the light and 
heavy steel industry combined. Only a short time after 
U. S. Steel's announcement in September, 1931, the Journal 
of Commerce estimated that 1,700,000 workers had already 
been affected by similar cuts. Of such importance was the 
directors' decision that President Hoover was reported to 
have been in constant touch with the doings of the board for 
some months before the decision was made. 

A Test of Steel Wage Rates 

If wage rates in iron and steel had been high, compared 
with other industries, this fact would not be surprising, since 
steel workers have had not only irregular work, but also work 
which required extra expenses met with in few other indus- 



tries. The shift system with its constant changes has added 
considerably to the cost of keeping house. Also, the men 
on hot work have had a big bill for clothing. In the old 
crucible steel plants now fortunately being superseded by 
electric steel plants the men on the floor were "on fire half 
the time." Hardly a week goes by that some one at the 
blast-furnace front does not find that his clothes have caught 
fire ; and the same applies to dozens of other jobs throughout 
the industry. Workers who have to walk on hot steel or hot 
cinder soon learn that they must expect to purchase their own 
shoe-repairing equipment, since commercial repair shops do 
not even have material to put on soles which would enable 
them to withstand the heat. Work gloves or hand leather are 
another big item of expense for very many workers. 

"Workers have to buy their own hand leather," writes a 
steel worker from Canton, Ohio. "We have to spend $5 
every two weeks for clothes worn out in the mill." 

But have steel wage rates been high? The bricklayers, 
carpenters, plumbers and machinists in the repair and main- 
tenance departments of the steel mills, the structural steel 
workers in the new erection, the locomotive engineers and 
firemen in the yards and on the company railroads, and the 
laborers engaged in construction work have all testified unani- 
mously that their rate was below the outside rate on work 
requiring the same degree of skill and training. 

Statistics are available to support this statement, so far as 
the common laborers are concerned. The U. S. Bureau of 
Labor Statistics collects periodically from a number of in- 
dustries, including iron and steel, the entrance wage rates 
paid to adult unskilled male labor. The steel rate has been 
not far from the average for all manufacturing industries 
and consistently below the average for all industries includ- 
ing contracting, as the table on page 62 shows. It will 
be observed that the difference between the steel rate and 
the average rate was much greater in 1932 (when the steel 


rate was only 84% of the average) than it was in preceding 
years, indicating that the common labor rate in steel fell 
with exceptional rapidity in the crisis. This difference can- 
not all be explained away by citing the well-known fact that 
in some other industries, such as building construction, the 
quoted rate is often far above the actual rate in times of 
depression and crisis. 



INDUSTRIES, 1926-1932 

(Source: Monthly Labor Review, Sept., 1926, pp. 528-30; 
Oct., 1928, pp. 751-4; Nov., 1930, pp. 1230-33; Oct., 1932, p. 919.) 


of all 

Iron and Industries, 

July I Steel Contracting Included 

1926 $ .427 $ .428 

1928 425 449 

1930 421 .431 

1932 318 .381 

But, it may be said, what is true of the laborers and 
workers in the trades is not necessarily true of the other 
workers in the industry. What of the rollers who got actual 
earnings all the way up to $450 a month as recently as 1929? 
Are not average earnings in steel high? 

The arithmetic average of steel workers' wages as 
compiled by the U. S. Bureau of Labor Statistics or the 
National Industrial Conference Board is an incorrect and 
misleading figure. In the first place, partly for historical 
reasons, this average is made to include some minor bosses 
earning quite high wages, such as rollers, heaters, shearmen, 
blowers and open-hearth melters. 1 In the second place, as 
the U. S. Commissioner of Labor pointed out in 1911, when 


the average earnings are $700 per year one employee at 
$2,500 and over has about 18 times as much effect on the 
average as one employee at $600 and about six times as much 
effect on the average as one employee at $4<X). 2 For these 
reasons we prefer to use the median.* 

The median wage rate in steel is a few cents an hour above 
the common labor rate. Median "full-time" weekly earnings 
in the highest-paid plants were not far from $25 a week in 
the spring of 1931, and had dropped below $19 a week by 
the summer of I932. 8 As of August, 1933, the median in 
these plants was around $21 a week. 

In most industries, including probably steel, money wages 
and real wages are lower in England than in the United 
States. However, it may be shown that in several occupa- 
tions in the steel industry money wages are actually higher 
in England than in some parts of the United States, and in 
a very few the English national average is above the national 
average for the United States. 

The writer visited a plant at Cardiff, Wales, in June, 1927, 
where the larry-men were getting $33.40 for a full week's 
work. This compared with $23.80 for the southern states 
of the U. S., and $31.90 for the average of the United States. 
At the same period, second helpers in the English open-hearth 
plants were earning $38.96 per week on Talbot and tilting 
furnaces, and $42.27 on stationary furnaces. The average 
for all open-hearth furnaces in the southern states was $38.22, 
and for the United States $45.49. It may be calculated from 
figures published in the official Monthly Labor Review of 
the U. S. Bureau of Labor Statistics that on October I, 1931, 
the full-time rate for British first and second helpers on the 
open-hearth was above the average for the United States, 
while blast-furnace keepers and skip operators on mechan- 
ically charged furnaces were earning more in England than 

* See above, p. 23, for definition of the median. 


in southern United States. 4 The iron and steel industry of 
England is unionized. 

Deductions from Wages 

The above calculations assume that if the steel worker 
actually worked a full week, he would receive the amount 
stated. However, what the companies are supposed to pay 
and what the steel workers actually get are two different 
things. Since the very earliest days fines have been collected 
from certain classes of workers, who have found themselves 
docked at pay day according to a scale set by the company. 
Furthermore, the boss often chooses to clip something off 
wages for a contribution to the Community Chest, a periodic 
payment to the group insurance (which is seldom voluntary 
in fact though it sometimes is in name), or payment into 
some company "welfare" fund. 

The companies' custom of holding back one or two weeks' 
wages results in loss to the workers. When a worker is 
obliged for personal reasons to leave town suddenly, or for 
any reason cannot appear in person on pay day, he often 
experiences difficulty in collecting. The writer was once paid 
in December for a day's work done in August in a steel mill 
in West Virginia. When a company decides, for any reason 
or no reason, not to pay a steel worker's wages, he is prac- 
tically helpless unless mass pressure is used in his behalf. 6 

For holding their jobs and especially for getting into better 
ones the workers must expect to shell out whenever the boss 
takes a fancy to collect. E. K. Griffiths, foreman of the 
Aliquippa tube mill of the Jones & Laughlin Steel Corp., 
admitted having extorted at least $10,000 over a period of 
ten years, from workers whom he had threatened with loss 
of their jobs. He was arrested in 1929. The justice said 
the amount Griffiths had collected was probably more nearly 
$30,000. Melvin Calhoun, foreman in the Colorado Fuel & 
Iron Co. plant at Pueblo, until he was murdered in July, 


1930, is stated by workers to have been a grafter of the same 
sort as Griffiths. 

Irregular Earnings 

Even to calculate "full-time" earnings will seem to most 
steel workers to-day like an insult. As early as 1929 there 
was no such thing as full time for more than a few weeks at 
a stretch in whole sections of the industry, including, for 
example, a great part of the industry in Allegheny County, 

The greatest grievance of the steel worker has been the 
irregularity of his earnings, reported the U. S. Commissioner 
of Labor as long ago as 191 2. 7 The best measure of fluctua- 
tions in earnings is contained in a U. S. Census monograph 
by Paul F. Brissenden, where year-by-year changes in real 
per capita earnings are calculated for 12 major industries, 
including steel works and rolling mills as one. 8 The steel 
workers' earnings vary more from one year to the next than 
those of the worker in any of the n other industries. 

Brissenden gives for each year the percentage change from 
the year preceding. Per capita purchasing power in steel de- 
creased one-quarter from 1900 to 1901, then increased 12% 
from 1903 to 1904 and iS% from 1904 to 1905. A 20% 
drop between 1907 and 1908 was more than made up in the 
following year, when an increase of over 29% took place. 
Per capita real earnings then fell off somewhat until the war, 
when the big year 1916 showed a 36.7% g am over ^ e P re ~ 
ceding year. Then for three years the war years, which 
were so profitable to the companies real earnings per capita 
remained stationary in spite of rising wage rates. An 11% 
gain in 1920 was wiped out by a 45% drop in 1921, then in- 
creases of 29 and 44% respectively were recorded in two 
successive years. 

Brissenden' s analysis ends with 1927; but if it were con- 
tinued into 1933 it would show fluctuations more violent 


than ever. From the figures of the U. S. Bureau of Labor 
Statistics, it may be calculated that average per capita real 
earnings in steel dropped 40% from July, 1931 to July, 1932.^ 

Even these figures give no idea of how low earnings have 
actually fallen under the stagger plan. A research worker 
(Edwin Clark) who interviewed 94 employed steel workers 
selected at random in Ohio and the Pittsburgh district in 
June, 1932, reported median weekly earnings of about five 

All of these figures on per capita earnings disregard the 
totally unemployed. The U. S. Bureau of Labor Statistics 
now publishes figures on payrolls. The monthly payroll in 
July, 1932, was less than a fifth the average monthly pay- 
roll in 1926. 

Prof. Abraham Berglund believes that the irregularity of 
employment has been increased by the policy of price stabili- 
zation. 10 However that may be, it is certain that the stability 
of workers' earnings has not been increasing but has been 
decreasing with the years, as the swings of the business cycle 
have become greater. 

The steel workers' chances of supplementing income by 
jobs in other industries have been becoming more and more 
limited. Manufacturing industry as a whole employed fewer 
men in 1929 than in 1919 though the country's population 
increased. For the steel worker to find jobs to "fill in" dur- 
ing periods of temporary layoff is all but impossible in most 
steel towns since the only other major industry in the neigh- 
borhood is in very many cases the coal industry, which is 
notoriously overmanned. The steel workers, especially the 
older ones, know that if they do not hang on to their half 
of the staggered job they may have no job at all for months 
or years thereafter. 


Wage Rates and Wage Cuts 

The irregularity of earnings, due in large part to causes 
originating outside the heavy industry itself, has been ac- 
centuated and increased by the policy of cutting wages in 

In the first 32 years of the U. S. Steel Corporation's his- 
tory there have been three periods of drastic wage reduction 
in 1904, 1921, and 1931-32. In each of these periods the 
common labor rate was reduced. The rates of skilled workers 
were cut in each of these three periods and also in 1907-08. 





(Source: C. A. Gulick: "Labor Policy of the United States 
Steel Corporation," p. 58; Iron Age, May 12, 1932; and miscel- 

Effective on Rate Effective on Rate 

April i, 1901 $1.50 April 16, 1918 $3.80 

June i, 1902 1.60 August i, 1918 4.20 

January i, 1904 1.45 October i, 1918 4.62 

April i, 1905 1.55 February i, 1920 5.08 

January i, 1907 1.65 May 16, 1921 4.05 

May i, 1910 1.75 July 16, 1921 3.70 

February i, 1913 2.00 August 29, 1921 3.00 

February i, 1916 2.20 September i, 1922 3.60 

May i, 1916 2.50 April 6, 1923 4.00 

December 16, 1916 2.75 August 16, 1923 4.40 

May i, 1917 3.00 October i, 1931 3.90 

October i, 1917 3.30 May 16, 1932 3.30 

July 15, 1933 4.00 

NOTE. The rate from October i, 1918, to July 15, 1921, was 
calculated on the basis of time-and-a-half for all time over 8 
hours. The 9-hour day was partially introduced in 1931-1932. 

Professors Commons and Leiserson gave wide publicity to 
the statement that "the policy of the [United States] Steel 


Corporation has been to standardize pay for unskilled labor 
and hold to it in good times and bad, laying off men, and 
working the mills part time, but not cutting the day labor 
rate." n This statement was not true as a general proposi- 
tion even at the time it was made (1911). The table shows 
the actual change in the rate for lo-hour labor in the two 
main producing districts.* The larger "independents" in 
these centers have not always paid exactly the same rate as 
U. S. Steel, but they have made wage changes at about the 
same time and of about the same amount. 

The history of the most recent period of wage cuts shows 
that the United States Steel Corporation was not driven by 
competition to make the cuts. Reductions in steel wage rates 
in 1930 were unimportant. The Iron Age has calculated 
from figures of the United States Bureau of Labor Statistics 
that in the first seven months of 1931, 8,224 workers in iron 
and steel had their wages cut an average of 7.2 %. 12 This 
would make the average wage reduction for the whole of the 
heavy industry up to the end of July, 1931, only 0.3%. 

The United States Steel Corporation, through its sub- 
sidiary the American Sheet & Tin Plate Co., was among the 
first of the companies in the heavy iron and steel industry 
to make important reductions in wage rates during the crisis. 
Cuts were reported in August, 1931, in United States Steel 
plants at Monessen, Pa., Bridgeport, Ohio, and Gary, Indiana. 
These cuts were probably intended as trials. The company 
evidently was pleased with the results, and announced a gen- 
eral cut of 10% in all wages, effective October i. All the 
other steel firms followed suit. Cuts had already been an- 
nounced by the Blaw-Knox Steel Co., Corrigan-McKinney 
Steel Co., Weirton Steel Co. (subsidiary of the National 
Steel Corp.) and the Wheeling Steel Corp. 

In addition, Bethlehem, Youngstown Sheet & Tube, and 
Republic had been nibbling at piece rates department by de- 

*For differentials between different districts see Appendix III. 


partment. Some of the cuts were indirect. Skilled piece 
workers were fired and then rehired at a lower rate. This 
method of cutting wages, which has been much used in the 
automobile industry, was apparently employed for the first 
time on a large scale in iron and steel during the current 
crisis. 18 

Percival Roberts, a director of U. S. Steel, later upheld 
the 10% cut on the ground that "lowered [wage] rates do 
not necessarily mean lessened earnings but very possibly the 
reverse." 14 He failed to explain, how the earnings of labor 
could be increased by the cut, inasmuch as the corporation 
did not reduce the prices of its products when it cut wages, 
and so had no reason to expect increased sales or increased 
business from the wage cut. 

United States Steel lopped another 15% off wages on May 
15, 1932, and this cut also promptly spread throughout the 
industry. A third and much more drastic wage cut was 
rumored for March, 1933, but it was postponed, according 
to the Wall Street Journal, because in February some thousands 
of auto workers struck in Detroit against wage cuts. The 
steel financiers had no doubt also heard of the strike at Buf- 
falo of the workers for the Lackawanna Steel Construction 
Co., who went out in January when their wages were cut to 
1 6 cents an hour. 15 On July 15 wages were increased 15%, 
but increased living costs left real wage rates something below 
the 1929 level. 

The Sliding Scale 

The collective agreements of the Amalgamated Associa- 
tion of Iron, Steel and Tin Workers have always provided 
that the scale of wages should vary with the selling price of 
the product. This principle of the sliding scale of wages is 
older than unionism in the iron and steel industry. It was 
reduced to a system when the Sons of Vulcan won their first 
collective agreement in 1865. The plan then adopted has 


remained in force ever since. 16 But since the Amalgamated 
Association controls only a small part of the industry, the 
sliding scale applies to-day only in sheet and tin mills and 
hand-puddled iron mills. 

Under this plan a base rate is set annually by representa- 
tives of union and employers in joint conference. Wage rates 
are adjusted every two months by a joint committee, which 
has access to the companies' books in order to determine the 
selling prices actually realized. When prices have risen or 
fallen, the wage rate is raised or lowered according to a scale 
agreed upon at the yearly conferences. The work of the 
scale committee, in determining prices each two months, is 
routine. Everything depends on the ability of the union to 
secure favorable annual terms for determining and varying 
the base rate. 

The sliding scale is used even by companies which do not 
sign any union agreement. The Iron Age reported in April, 
1927 (p. 1239), that the bi-monthly wage settlements, carried 
out by representatives of the Amalgamated Association and 
of the employers, governed the wage scales of about 75% 
of the sheet and tin plate capacity of the country, although 
manufacturers who actually signed the scale represented less 
than 25% of the sheet-making capacity and less than 20% 
of the tin plate mills. If the Iron Age was correct, then some 
mills of U. S. Steel subsidiaries were following the changes 
in the scale, and have continued to do so since. Earnings 
in mills of U. S. Steel are at least 15% lower than those in 
union mills, according to report. The difference is due less 
to the difference in wage rates than to the fact that U. S. 
Steel mills have no agreement and hence no protective rules. 

Standards of Living 

The standard of living which the steel worker is able to 
maintain for his wife and family is lower than one would 
expect from the amount of money that he actually receives. 


Middle-class visitors to the United States have frequently 
been horrified at the poverty observed in the steel towns. 
The explanation of the low standard is partly in the wage 
rates, but especially in the ebb and flow of employment, 
which first tempts the worker to a scale beyond his ability to 
maintain, and than sweeps away his savings and throws him 
into the clutches of the loan shark. Property that the worker 
has attempted to purchase, it may be on the installment plan, 
is twisted out of his possession, and his savings disappear in 
the vain fight a fight partly against high interest rates and 
dishonest merchants, but especially against the effects of part- 
time work and unemployment. 

Housing conditions illustrate the situations caused by fluc- 
tuating jobs. When war orders swelled employment in the 
Pittsburgh district, the steel suburb of Rankin was crowded 
to capacity, and beyond. In one block, 28 small houses held 
in 1920, 256 persons, of whom 116 were children. The four 
rooms of one house held 34 persons. A man, wife and two 
children and twelve boarders occupied four rooms near by. 17 

Twelve years later, the families in Rankin and in steel 
towns throughout the country were piled one on top of the 
other, but for an opposite reason. They had become unable 
to pay rent for separate houses, and relatives went to live 
with relatives, and even strangers with strangers, as landlords 
forced evictions and the steel mills remained closed or worked 
one or two days a week. 

"Because of poverty due to unemployment, people are 
again occupying dwellings of a kind that were being vacated," 
reported John Ihlder, director of the Pittsburgh Housing 
Association, in 1932. "This relapse to a lower standard of 
living threatens to have serious consequences in its effect 
upon the health and morale of the population." Ten families 
were living in a house of 13 rooms, one cellar room was 
housing a family of eight, families were being broken up 
and the children distributed, not from any shortage of 


houses, but because the steel industry was not supporting its 
workers. 18 

The steel boom town almost never builds houses fast 
enough to accommodate the workers who must man the mills. 
So cities like Gary grow up as chronically overcrowded 
places. "Housing shortage severe enough to hamper the pas- 
sage and enforcement of regulations governing building and 
sanitation has existed in Gary practically from the begin- 
ning," reported the U. S. Children's Bureau in IQ22. 19 

The steel town is not a healthy place to live in. One of 
the best ways to judge the healthfulness of a town is to look 
at its infant mortality rate. The steel towns having an infant 
mortality rate above the average outnumber the steel towns 
below the average by two to one. Especially pestilential are 
Steubenville, Ohio, with a rate of no.8 deaths under one 
year of age per 1,000 live births. Ashland, Ky., with a rate 
of 109.6, and Steelton (near Harrisburg), Pa., with a rate 
of 103.6, compared with a general average for all cities of 

65.5- 20 

An investigation of wage-earners in different industries 
by the U. S. Public Health Service showed that "there were 
twice as many cases of typhoid and malaria per 1,000 men 
in the iron and steel industry as in the other industries as a 
whole, and 21 times as many cases of smallpox." 21 These 
diseases were obviously due to the conditions in the com- 
munities, not to conditions on the job. 

Housing conditions are worse and infant mortality rates 
higher for colored than for white workers in the steel towns, 
owing first of all to the fact that the Negro worker has the 
worst-paid jobs (infant mortality is always greater in the 
poorer sections) and secondly to the practice of segregation. 
The Negro in the midwestern steel towns gets shunted off 
into sections where transportation is bad, or where business 
houses are growing up or factories taking hold. The chronic 
overcrowding that is characteristic of Negro neighborhoods, 


owing to the scarcity and high price of houses available for 
Negroes, may continue for all that the bosses care. The 
committee on Negro housing of the President's Conference 
on Home Building and Home Ownership admitted : 

All that can be expected are further decline and deterioration 
in these [Negro Jim-Crow] areas until they are taken over by 
business and the Negro population pushed into another cycle of 
the same character. 22 

In the following two chapters we shall try to show how 
far the companies' policy is to blame for the persistent 
scourge of the steel employee's working life, long hours 
and speed-up followed by layoff, exhaustion followed by idle- 
ness, in a word, too much and too little work. 




THE IRON AND STEEL INDUSTRY has been notorious for its 
long hours. It entered the crisis with an average working 
week for all departments combined, of more than 52 hours, 
with a majority of the laborers in most departments working 
10 hours a day, and with probably over a thousand jobs on a 
basis of 12 hours a day, seven days a week. The two depart- 
ments of the industry where the 8-hour day is general (pud- 
dling, and sheet and tin plate mills) are the departments with 
the strongest tradition of unionism. 1 

It is true that there has been a sharp reduction of average 
hours worked per day in the last 10 years a reduction which 
still continues. The number of men in iron and steel who 
were working 12 hours a day in 1922 was authoritatively 
estimated at 150,000, out of about 425,000 workers in the 
industry. 2 At this time a few of the larger "independents" 
Wisconsin Steel Co., American Rolling Mill Co., Colorado 
Fuel & Iron Co., McKinney Steel Co. and a number of 
smaller steel companies had already introduced three shifts 
on at least some of their continuous work. Then in 1923, 
just as the American Federation of Labor was going through 
the motions of starting a unionization campaign in steel, the 
U. S. Steel Corporation abolished the two-shift system in all 
its plants and was promptly followed by all the large and 
most of the small "independents" in the North and East. 

The action of U. S. Steel was forced by the pressure of 
labor and public opinion, which had become irresistible partly 
because of the success of organized labor in abolishing the 



two shifts over the length and breadth of the European iron 
and steel industry and especially because the great steel strike 
of 1919 had centered attention on conditions in the industry 
and showed that the workers could be brought out on strike. 
The United States was the last major country, with the ex- 
ception of Japan, to do away with the long day for the mass 
of its steel workers.* Elbert H. Gary, chief executive officer 
of the U. S. Steel Corporation, defended the 12-hour day to 
the last, and as late as May 25, 1923, the American Iron and 
Steel Institute decided after "investigation" that "abolish- 
ment of the 12-hour day in the iron and steel industry is not 
possible or feasible at this time." 

Contrary to a common impression, the U. S. Steel Cor- 
poration did not introduce a general 8-hour day for all its 
workers in 1923. Probably a majority of all its workers have 
continued on a lo-hour schedule. 

Even after 1923, several important companies continued 
the two-shift system. The southern "independents" of 
which the Gulf States Steel Co., Woodward Iron Co., Sloss- 
Sheffield Steel & Iron Co., and Republic Steel Corp. (southern 
plants) are the largest still continue to operate the continu- 
ous processes on two shifts. The following important "inde- 
pendents" in the North and East were also in the summer of 
1929 forcing a substantial part of their workers to put in 
days of 12 hours or more, on penalty of losing their jobs: 
Wheeling Steel Corp., Allegheny Steel Co., A. M. Byers Co., 
Crucible Steel Co. of America, Edgewater Steel Co., Page 
Steel & Wire Co., Pittsburgh Steel Co., Universal Steel Co., 
Washington Tin Plate Co., Witherow Steel Corp. and Cen- 
tral Alloy Steel Corp. (both now part of Republic Steel 
Corp.), Empire Steel Corp., Midland Steel Co., Newton 
Steel Co., Otis Steel Co., Superior Steel Corp., Weirton Steel 

*The two leading Canadian steel companies kept the two-shift 
system until 1930 and 1931 respectively. Germany reintroduced the 
two shifts for a few years beginning 1924. 


Co. (now a subsidiary of the National Steel Corp.), She- 
nango Furnace Co., Reading Iron Co., Eastern Rolling Mill 
Co., Central Iron & Steel Co., Logan Iron & Steel Co., 
Lukens Steel Co., and Midvale Co. 8 This list would be 
doubled if the smaller mills having some 1 2-hour work were 
included. The U. S. Bureau of Labor Statistics found in 
the spring of 1929 that the proportion of workers in the 
industry as a whole who were on a schedule of 72 hours a 
week or more (i. e., 12 hours a day for at least six days a week) 
was "only" 5% ! 4 This proportion has since been reduced, at 
least temporarily. 

Twenty-four-hour turns at the change of shift were being 
worked in 1929 by a number of mills, including that of the 
Central Alloy Steel Corp. at Massillon, that of the Thomas 
Sheet Steel Co. (subsidiary of the Empire Steel Corp.) at 
Niles, and several southern mills. 

"Full-time hours" is a convenient category which enables 
the steel companies to cover up the number of hours they 
actually work their men at a stretch. In a plant which 
usually works 10 hours a day, it is common for the men to 
keep at work anywhere from one to three hours extra at 
straight time, in order to finish an order, even if they are 
laid off immediately after. In such circumstances the 15- 
hour day is not at all unusual. Yet these companies un- 
doubtedly report their "full-time hours" as eight or ten per 

The workers have no guarantee that such reductions in 
hours as have been introduced by the companies will be per- 
manent. The five-hour day established in some parts of the 
American Bridge Co. plant at Ambridge, Pa., and the six- 
hour day now (1933) being worked in a number of sheet 
mills, are simply a modified stagger or short-time system. A 
worker reports that the no-inch plate mill in the Sparrows 
Point plant of Bethlehem had been working on two shifts 


of ten hours each. Late in 1930 it got a rush of orders and 
began to operate three shifts of eight hours each. With a 
decline of orders it reverted back to the ten hours. In other 
mills, just the reverse process has taken place. Mills that 
reduce hours when work is slack increase them again when 
work is plentiful. The Republic Iron & Steel Co. changed 
some of its workers at Youngstown from three to two shifts 
during a busy period in 1929. In either case, the limits set 
for the companies by the pressure of labor and public opin- 
ion are very wide ones. Only where the workers have a 
militant union organization do they have any real assurance 
that reductions of hours will be retained.* 

Why the Twelve-Hour Day Persisted 

In the early stages of an industry there comes usually a 
time when, with advancing technique, the output is less than 
the amount that can be produced and sold at a profit. Then 
new capital is obtained, and the plants tend to operate right 
up to the limit of human endurance and beyond. In the iron 
and steel industry, the two-shift system, with the 24-hour 
turn at the change of shifts, was of long standing, and so 
there could be no question of lengthening hours on the con- 
tinuous processes. On the contrary, as the unions gained in 
power, the iron and steel mills early seemed ripe for the next 
stage in the matter of hours that of reduction. The policy 
of "driving" the blast furnaces, introduced in the Edgar 
Thomson plant of the Carnegie steel interests shortly before 
1880, made it seem that the two-shift system would have to 
give way to the three-shift system, even at that early date. 
Capt. William Jones, superintendent of the plant, said in 

* Under the code of fair competition adopted August, 1933, for the 
steel industry, the daily and weekly maximum of hours is to apply "in 
so far as practicable" ! Steel workers do not need to be told that this 
limitation is no limitation at all. 


In increasing the output of these works, I soon discovered that 
it was entirely out of the question to expect human flesh and 
blood to labor incessantly for twelve hours, and therefore it was 
decided to put on three turns, reducing the hours of labor to eight 
This has proved to be of immense advantage to both the company 
and the workmen, the latter now earning more in eight hours 
than they formerly could in twelve hours, while the men can work 
harder constantly for eight hours, having sixteen hours for rest* 

The Edgar Thomson and a number of other mills, both 
union and non-union, went onto the eight-hour day during 
the eighteen-eighties because of the intense speed-up and vig- 
orous union activity. One company Moorhead, McCleane & 
Co., of Pittsburgh took advantage of the situation and put 
the leading union in a false position. It proposed to intro- 
duce the eight-hour day without a corresponding increase in 
wage rates; and the Amalgamated Association of Iron and 
Steel Workers, not being strong enough to force the higher 
rates, refused. The union heads branded the offer as an 
example of the "encroachments of aggressive and designing 
capital." 6 

Ever since, the employers have tried to throw the blame 
for the continuance of the 12-hour day on the workers. But 
there was never really any doubt as to where the workers 
stood, in spite of the fact that the union at first adopted 
wrong tactics. In April, 1886, a year of great union activity 
all over the country, the Carnegie interests were forced to 
abandon their attempt to restore the two shifts at the Edgar 
Thomson plant. Even after 1892, when the union was driven 
out of the steel mills, and the two-shift system was once more 
generally introduced (except in puddling, sheet and tin mills), 
the workers kept on circulating petitions for the eight-hour 
day from time to time, even offering to forego an increase in 
hourly wage rates. 7 It is not simply accident that only in 
the unionized sections of the industry did the eight-hour day 


How did it happen that what "flesh and blood could not 
stand" in 1879, it was able to stand in 1892 ? The answer is, 
machinery. Improved machinery and processes, eliminating 
the toughest jobs along with many others, made it possible 
for the companies to go back to the 1 2-hour day when they 
were already well on the road to eight hours. It was ma- 
chinery, introduced with extreme rapidity year after year, 
that did away with many skilled men and thereby weakened 
the union, the greatest protection of the workers. It was ma- 
chinery, the latest improved type, that piled up profits for 
the leading company the one headed by Carnegie and gave 
it a war-chest to fight the union. It was machinery, millions 
of dollars' worth, that made competition suicidal and led the 
companies to maintain prices. It was machinery, potentially 
labor's greatest benefactor, which in the hands of "aggres- 
sive and designing capital" became, for the time being, labor's 
greatest apparent enemy. 

The pressure to lengthen hours is still felt when a new 
process gives opportunity temporarily for extra profitable 
operation. We cite the two outstanding new processes intro- 
duced in the last five years the Aston mechanical puddler 
and the continuous sheet mill. As soon as the A. M. Byers 
Co. had perfected the Aston process, it is stated to have 
broken relations with the Amalgamated Association and 
switched its plants over from a three-shift to a two-shift 
basis. The American Rolling Mill Co. introduced the con- 
tinuous sheet-mill process at its Middletown plant in 1927. 
It broke off relations with the Amalgamated Association in 
1929. The work in the sheet mills under the Armco and 
similar newly patented processes is still so strenuous that 
even a capitalist company could not possibly introduce the 
12-hour day. But the changes in wages show what the effect 
on skill and bargaining power have been. At the Youngs- 
town plant of the Youngstown Sheet & Tube Co., it is re- 
ported that a whole crew operating in 1932 under one of the 


new continuous processes was getting only as much money 
as a single roller received before the change. 

The workers in steel, like the workers in every other indus- 
try, value shorter hours. It may be assumed that they favor 
shortening hours per day not merely to eight but to seven 
and even six as a permanent proposition, provided, of course, 
that there is no reduction in the weekly wage. Some sheet 
mills in the Soviet Union are already on a permanent six-hour 

Seven-Shift Week 

The seven-day week, or rather the seven-shift week, was 
the rule throughout the industry in 1929 the last year of 
active production in those departments and operations which 
operated continuously. Over a quarter of the iron and steel 
workers investigated by Ernst and Hartl in the summer of 
1929 were working seven shifts a week. 8 The Pennsylvania 
blue laws prohibiting Sunday work do not affect the steel 

The seven-shift week has increased greatly since 1912. 
Whenever the companies working their men only six days 
or less get a surplus of orders, they are likely to go onto a 
schedule of seven shifts a week. The U. S. Steel Corpora- 
tion is an outstanding example. Just before the war it prac- 
tically abolished the seven-shift week in the plants of all its 
subsidiaries ; then, during the war, it reintroduced the seven- 
shift week quite generally. 9 When forced to substitute three 
shifts per day for two, it extended the seven-shift week still 
further. From 1926 to 1929 the percentage of workers on 
seven shifts in the industry as a whole increased strikingly, 
especially in the open-hearth department (from 52% to 66% 
of the total), blooming mills (20 to 31%), and rail mills (6 to 
20%). In the blooming mills in 1929, 31% of the employees 
were working seven shifts a week; in the blast furnaces 54% 


of the workers were on seven shifts while iS% more worked 
six, seven and seven shifts on successive weeks. 10 

The steel employers, especially the U. S. Steel Corpora- 
tion, have done their best to conceal the extent of their seven- 
shift operation in recent years. The blast furnaces of U. S. 
Steel in the Pittsburgh and Chicago districts have operated 
on the so-called "one day off in 19" system. Each worker 
gets 32 consecutive hours of free time every iQth day, but 
each 7th and I3th day he works 16 hours out of 24. There 
is no relief turn. This is 7-shift operation. 11 But vice-presi- 
dent Burnett of the Carnegie Steel Co. tried to mislead Ernst 
and Hartl into thinking that the seven-shift week had been 
abolished in his company's plants a conclusion which they 
could not accept as true.* 


Side by side with the persistence of the long working day 
and the continuous working week in steel must be noted the 
introduction, now in one place and now in another, of 
speed-up systems, designed to get the last ounce of energy 
out of the employed workers and cut down the labor cost 
of the companies. 

Workers use the term "speed-up" in two senses: (i) to 
denote an increase in productivity and (2) to denote an in- 
crease in the energy exerted by the individual worker. We 
are concerned here only with the second kind.** 

Frederick W. Taylor, the father of "scientific" speed-up, 
was a contribution of the iron and steel industry to the world. 
Taylor did not think of calling his system "scientific" manage- 
ment until he had been practicing it for over a decade. H. L. 

* For a time, U. S. Steel had what it called a "voluntary" six-day 
week. Workers who stayed home the seventh day were treated like 
absentees and soon resumed a seven-day schedule "voluntarily." 

** Productivity is discussed in Ch. VI. 


Gantt, an "efficiency" expert who was trained by Taylor, 
described Taylor's system in 1910 as the "drive system." 

Taylor had a deep contempt for the unskilled laborer. 
"One of the very first requirements for a man who is fit 
to handle pig iron as a regular occupation is that he shall 
be so stupid and so phlegmatic that he more nearly resembles 
in his mental make-up the ox than any other type," wrote 
Taylor in 191 1. 12 He was an uncompromising foe of trade 
unionism to the end of his life. 

Taylor learned how to use sly methods in his war for 
greater output. When the unjustness of his fines caused the 
men to sabotage their work, he started a mutual benefit asso- 
ciation, to which the workers as well as the company con- 
tributed. "All the fines," he explained, "can then be turned 
over each week to this association, and so find their way 
directly back to the men." 18 

Taylor's famous experiments in job analysis, and his task- 
and-bonus systems of wage payment, arose directly out of a 
desire to make his employees work faster. Employers in other 
industries welcomed enthusiastically Taylor's achievements 
for Midvale, and later for Bethlehem. Many attributed to 
his speed-up policies certain results in output that were due 
to Taylor's really solid contributions to science in the fields 
of accounting and the development of the alloys technically 
known as "high-speed steel." 14 

Taylor's most famous "experiment" was probably that by 
which he got a gang of laborers to load four times as many 
pigs of iron in a day as formerly. The worker originally 
selected for experiment was building himself a house in his 
off hours. By increasing his output 300% he earned a pay 
raise of 60%. He presumably also paid some one else to 
build him the house. Taylor believed that a rate of pay more 
than 60% above the market rate tended to make the workers 
irregular and "more or less shiftless, extravagant, and dissi- 
pated." 15 Only one man in eight could stand the new pace ; 


but Taylor "had not the slightest difficulty in getting all the 
men who were needed." The surrounding country provided 
a reservoir of labor. 

But the system of slide-rules and stop-watches which 
Taylor developed made much more rapid headway in the 
machine shop than in the yard. The heavy industry as a 
whole remained for many years cold to Taylor's ideas. Taylor 
was fired from his job at Bethlehem in 1901, and Charles M. 
Schwab, who succeeded to the ownership of Bethlehem just 
afterwards, did not recall him. Until the last decade the 
heavy branch of iron and steel could not, as a whole, be de- 
scribed as a badly speeded industry, though individual plants 
and departments had gone over to some form of Taylorism. 

No doubt the fundamental reason for the heavy industry's 
attitude toward speed-up was the fact that wage payments 
were a smaller part of the employer's budget, compared with 
interest on investment and other overhead, than in other in- 
dustries. The custom of meeting rush orders by working 
overtime, rather than by increasing production within a given 
span, may also have had an influence. 

Since the war, and especially since the beginning of the 
crisis, Taylorism and other forms of speed-up have been in- 
troduced much more widely, so that steel's tradition as a slow- 
paced industry may change altogether. Speed-up has become 
one of the outstanding grievances in the industry. 

The workers say that they have been speeded in a number 
of different ways, each of which will be illustrated by one 
or more quotations from individuals. If the workers' names 
are not given, the reason will be obvious. Never before has 
it been so necessary for them to retain the piece-of-a-job 
which they still possess. 

Workers report that speed-up has been achieved by 
(i) More bullyragging on the part of the lesser bosses. 
This is the easiest method and also the commonest. 


Big boss come over and say "Hurry up! You so slow you 
make me sick." (Carnegie Steel Co., Clairton plant, June, 1932.) 

In tin mill boss pushes and kicks me. (Weirton, W. Va., 
plant of Weirton Steel Co., subsidiary of National Steel Corp., 
August, 1932.) 

If you don't put out more work, they will get some one else 
who will. (Warren, Ohio, plant of Republic Steel Corp., August, 

The men can't slow down on the job. They will be fired if they 
do. (South Chicago plant of Illinois Steel Co., subsidiary of 
U. S. Steel Corp., August, 1932.) 

Women and girls are subject to this kind of abuse no less 
than men. 

Girls that can't keep up with the speed-up get hell from the 
floor-lady. She tells them: "You are getting old; you worked 
here too long. You ought to quit working." That's the answer 
we girls get for slaving 15 to 20 years in the mill. Many are 
forced to quit their jobs. Many can't finish their turn. Those 
that don't have fear from the bosses or for their jobs go home 
sick and stay a few days, then back to the slave house they go. 
(McKeesport Tin Plate Co., December, 1930.) 

(2) Introduction of some form of bonus system. The 
Lukens Steel Co. with a huge plate mill at Coatesville, Pa., 
introduced the Bedaux system at the end of 1931, the first 
time, so far as is known, that this system has been used in 
the heavy iron and steel industry. About the same time the 
Sharon Steel Hoop Co. introduced at Farrell, Pa., a "norm" 
system, akin to the Bedaux system. It allots a certain time 
to each job and puts a "pusher" at the head of each group of 
workers to see that they attain the "norm." Stop-watch ex- 
perts have made their appearance at the Minnequa plant of 
the Colorado Fuel & Iron Co. at Pueblo, Col., at the Toronto, 
Ohio, plant of Follansbee Bros., and also in many plants of 


the Bethlehem Steel Corp. These experts try to keep their 
mission a secret. They hide behind pillars with hands in 
pockets, or enter the works as common laborers to find out 
the shortest possible time in which a job can be performed. 

Sometimes a bonus is paid to the super or foreman, who 
then drives the workers (the U. S. Steel Corp. plan of 1903 
was of this type) ; 16 sometimes to the skilled men, who are 
expected to drive the unskilled (Illinois Steel, Gary works; 
galvanizing department of Youngstown plant of Republic 
Steel Corp.) ; sometimes to the gang as a whole, which must 
then exercise pressure on the slower members or miss the 
extra payment (Youngstown Sheet & Tube Co., Indiana Har- 
bor plant, extending over the decade to August, 1932; and 
many others). 

While some of those bonus plans are of long standing, 
many others have lasted only a short time. They are intro- 
duced, modified, and abolished before the workers have 
grasped what it was all about. Such plans are a source of 
continuous irritation and annoyance to everybody. The 
workers fully realize that the sole purpose of the bonus is to 
speed them up at the least possible cost. The boss, for his 
part, sometimes tries to use the bonus system to set the 
workers fighting with each other, as the following letter, 
taken from the official organ of the Metal Workers Industrial 
League, well shows : 

Pittsburgh, August 27, 1930. 
Editor Metal Worker: 

I am working in the Crucible Steel Mill in Pittsburgh as a 
chipper. We used to work for 44 cents an hour and bonus which 
was given to us in order to get us speeded up more. Prior to 
September ist the boss called us all and told us that from now 
on no more day wages but only by tonnage. He didn't say how 
much they would pay on the tonnage. The boss tells all the 
workers to watch for one another so that none fools around on 
the job. . . . The bosses are thus trying to create ill feeling 
among the men. Speed and more speed is the cry of the boss. . . . 


(From The Metal Worker* Pittsburgh, organ of Metal Workers' 
Industrial League, October, 1930, p. 2. Emphasis not in origi- 

Some workers are afraid to ask for the bonus. 

Workers that are to get a bonus are afraid to ask for it because 
the bosses will give them the worst jobs. That's why they don't 
ask for it. (National Tube Mill Worker, McKeesport, Pa., in 
Labor Unity, February 8, 1931.) 

Others find the bonus system either too complicated or else 
dishonest. Two examples may be taken from the pre-crisis 

In the Tube Mill the men work 12 J^ hours, on the night shift, 
and are also supposed to get a bonus. But we never know how 
much we are getting. They give us as much as they please. 
Sometimes 25c and sometimes more. 

This bonus system is very profitable for the bosses. We work 
like hell to make out a little more, and in the end we are even 
cheated out of what is coming to us. If any one protests against 
the long hours and this cheating, the company "investigates" not 
whether we are actually cheated, but to find out the leaders of 
those who are protesting, and fire them. Then they say that the 
men quit. (From The Red Ingot, shop paper issued by the Com- 
munist Party nucleus in the Republic Iron & Steel Co. plant, 
Youngstown, Ohio, September, 1929.) 

The company has two reasons for using the "bonus" system. 
First, because the "bonus" system enables the company to carry 
its "speedup" policy to the extreme by squeezing the very life out 
of us; and secondly, by switching from one job to another it is 
impossible for us to keep a full account of our production with 
the result that at the end we are cheated out by the company of 
the extra few cents which we are supposed to get in the form 
of "bonus." (From The American Bridge Worker, shop paper 
issued by the Communist Shop Group in the Ambridge, Pa., plant 

* This paper has now become The Steel and Metal Worker, organ of 
the Steel and Metal Workers Industrial Union. See Ch. XI. 


of the American Bridge Co., subsidiary of the U. S. Steel Corp., 
summer of 1928.) 

(3) Cutting piece rates. This expedient sometimes has the 
effect of making the workers slave so hard that they earn as 
much under the new piece rate as under the old. In the Mc- 
Keesport Tin Plate Co. plant, where piece rates have fre- 
quently been cut, reports received by the Metal Workers' 
Industrial League indicated that the company had put men 
on piece rate basis next to those who got paid by the hour, 
"which means that those who are not on piece work will 
have to step on it in order to keep pace with those who work 
on piece work." 1T It was reported in June, 1931, that piece- 
workers in the employ of the Blaw-Knox Steel Co., of Blaw- 
nox, Pa., who had been screwed up to a maximum possible 
speed and had been earning as much as $9 a day by hustling, 
were suddenly switched to time-work at 5oc per hour, and 
were told that they must maintain their former rate of pro- 
duction or lose their jobs. 18 

Piece rates are sometimes cut indirectly by raising stand- 
ards of work. 

A reckoner used to be able to make a living a few years ago, 
but the boss now demands that every box be weighed where 
before they weighed one box out of ten. ("Tin Mill Worker" 
in Sparrows Point plant of Bethlehem Steel Corp., December, 

The superintendent tells the roller he must keep the rolls cool 
and tells the heaters that unless they keep their furnaces down 
low they will lose their jobs, no matter how long they have slaved 
for the company. The result is that the steel comes out of the 
furnaces too cold to roll well and this, coupled with the fact that 
the rolls are cold, makes it necessary to give it as many as eight 
or ten passes through the rolls instead of four or five as usual. 
All pay is on the tonnage basis. (From Indiana Harbor Plant 
of Youngstown Sheet & Tube Co., May, 1931.) 


(4) Changing supervisory foremen into working foremen. 
"Boss works too now so there is nobody to spell a worker as 
there used to be," reported a worker in the Clairton works 
of the Carnegie Steel Co. in June, 1932. 

(5) Eliminating rest periods. Workers on shifts of six, 
eight, ten and even more hours report that they have to eat 
with one hand and work with the other, since there is no 
rest period. A less extreme variation cuts out the breakfast 

The boss in the pickler room forces the workers so that they 
cannot go to the toilet (Worker in "Canton Tin Plate Mill," 
Canton, Ohio, October, 1931.) 

Eight hours straight without a minute off even to eat. That's 
the way they force the matchers to woflc. A man can't even take 
his time to reach in his pocket for a chew of tobacco on this job. 
(From Red Standard, shop paper issued by the Communist Party 
nucleus in the Aetna Standard Works, Bridgeport, Ohio, of 
American Sheet and Tin Plate Co., U. S. Steel subsidiary, 
August, 1929.) 

The workers used to get a few minutes to eat at 9 A.M., but 
now must wait till dinner time. ("National Tube Worker," 
Versailles, Pa.; see Labor Unity, August 22, 1931, p. 4.) 

At 6 A.M. I was on the job as usual, and I slaved until 5 P.M. 
When I was hungry I ate my sandwich with my left hand and 
did all the work with my right one. At 5 P.M. I had an hour and 
a half to rest and then went back to work again and continued 
till 6 A.M. (From Thomas Sheet Steel mill of Empire Steel 
Corp., Niles, Ohio, August 27, 1929.) 

Workers in a number of mills report that they are timed 
when they go to the toilet, or even when they have to visit 
the doctor's office. (Tin mill of American Sheet & Tin Plate 
Co. at Gary, Indiana, September, 1930.) There are also a 
number of plants where workers say it is impossible for them 
to go for a drink of water. 


(6) Cutting down on number of men without change in 
technique. It is expected that a new machine will be operated 
by fewer men than an old one, but it has been common, 
especially since the beginning of the crisis, for workers to be 
fired without any change, and the work divided among the 
men remaining, or simply omitted. The number of men in 
the pickling department of the Newton Steel Company's sheet 
mill at Monroe, Mich., is reported to have been reduced in 
1932 from 1 6 to 10, without any change in technique. Cer- 
tain companies have fired the workers who used to keep the 
lavatories clean. 

(7) Cutting down on number of hours worked by each 
individual. Some forms of the stagger plan result in a hotter 
pace for all. This is especially true where two crews of men 
are kept on the job throughout the shift, and spell each other 
off, each crew then receiving pay for only half the shift. 

We are forced to do eight hours work in five, which is a slave- 
driving, brutal way of treating any worker. ("J. R.," employee 
in American Bridge Co. works, Ambridge, Pa., April, 1931.) 

(8) Speeding up the machinery. In the fall of 1929 it 
was reported from the Youngstown district that workers 
stacking steel plates in the plant of the Sharon Steel Hoop 
Co. had had the electric belt speeded up on them so that they 
had to pile twice as many plates as previously. Many were 
said to have been carried out during the summer heat. 19 

Against the driving tactics of the bosses the workers can 
put up a certain defense. In particular cases they have some- 
times managed to hold down the output to an established 
schedule by tacit agreement. But changed technique has 
made the establishment of anything like a customary standard 
in most departments of the industry very difficult if not im- 
possible. And in the economic crisis, when the boss is in a 
position to play off one gang of men against the gang that has 


the other half of the job, informal and unorganized restric- 
tion is not likely to be effective. 

The boss, however, knows that the workers resent speed-up 
methods, and sometimes takes precautions against resistance, 
as in a case reported by John Meldon, secretary of the Steel 
& Metal Workers' Industrial Union. 

The Republic Steel Corp. at its Youngstown plant introduced 
time study in the blacksmith shop. It was put forward as a means 
for the men to make more money, and for a time after they 
accepted it by a formal vote, some did make as much as 50% 
more. Then by a gradual process of weeding out old men and 
introducing new ones, at lower rates, the earnings were cut to 
pretty much the former level, while output stayed up. (Inter- 
view, February 12, 1932.) 

A very similar story is told by workers at Pueblo, Col., em- 
ployed by the Colorado Fuel & Iron Co. 

Speed-up is an essential part of the bosses' drive to reduce 
costs, which has accompanied the slowing up of production 
increase and the narrowing of markets since the war. Al- 
though it is not peculiar to steel, it is far more serious in 
steel than in most industries because of the dangers to health 
which are involved. Hot and exposed work are dangerous 
enough when the pace is slow. To speed up such jobs to the 
pace attained in industries with less unfavorable conditions 
is a refined form of murder. 




EVEN more terrible than speed-up, in its effects on the 
worker, is unemployment, with its companion menace, under- 

Unemployment and under-employment had become chronic 
for iron and steel workers long before the crisis. Pennsyl- 
vania has a third of the industry. In that state, employment 
in 1929 was at 76.5% of the 1923 level in steel works and 
rolling mills, and only at 39.7% of the 1923 level in blast 
furnaces. 1 The figures of the Census of Manufactures indi- 
cate that in this state a net total of more than 27,000 iron 
and steel workers were dropped from employment between 
1923 and 1929. Thousands of these did not leave town at 
once but remained to swell the reserve army of labor. 

Since production in April, 1930, was about as active as in 
the average of all post-war years, the proportion of unem- 
ployment in that month the month of the decennial census 
is typical of what has been considered "normal" unemploy- 
ment. We calculate that about 12.3% of the male steel 
workers were completely unemployed at the time of the 1930 
census ; that is, one steel worker in eight has been totally un- 
employed in "normal" times.* This calculation is conserva- 
tive, since it takes no account of any of the 1,100,000 casual 
workers listed by the census as not attached to any industry. 
Some of these were undoubtedly former steel workers. The 

* See Appendix V for method and details. In this calculation we 
have omitted the unemployed whom the census missed, although these 
were undoubtedly numerous. 



proportion of unemployment in this undistributed group was 
unusually high. 

Under-employment was almost a more serious menace than 
unemployment. We have no exact measure of the extent of 
part-time employment in steel, either before or during the 
crisis.* We do know, however, the extent of part-time op- 
eration, measured as a percentage of capacity. . These figures 
show that for the five years from 1926 through 1930 over 
23% of the capacity of the steel mills was unutilized, on the 
average, all the time. In this connection we should remind the 
reader that the companies follow the policy of keeping on call 
all the time, so far as possible, enough workers to man the 
plant at capacity. The percentage of idle capacity is practically 
always higher in the rolling mills and blast furnaces than in 
the steel mills. It is not unreasonable to suppose that part- 
time employment accounted for as much joblessness in April, 
1930, as complete unemployment and that a quarter of the steel 
workers were actually idle at the date of the 1930 census. Not 
one steel worker in eight but one steel worker in four was out 
of work on the average at any given date in the post-war 
period, even before the worst of the crisis. 



INDUSTRY, 1926-1930 

(Source: Computed from Annual Statistical Reports of Ameri- 
can Iron and Steel Institute.) 

Percentage of capacity which Average 
Product was unused in of 

1926 1927 1028 1929 1030 5 years 

Pig iron and ferro-alloys 24 29 25 27 39 28.8 
Steel ingots and castings 18 26 23 12 39 23.6 

It is very exceptional for a steel plant to operate full time 
at full capacity for more than a short period. If the reports 

*The Census Bureau has some unpublished material that was col- 
lected in April, 1930, and January, 1931. 


to the Federal Bureau of Labor Statistics for the years 1925, 
1926 and 1928 are studied, it will be found that only during 
four months in the three years (none of which years was a 
year of depression) did the proportion of plants in the indus- 
try operating full time exceed 80%, and in no month was the 
proportion above 83%. In a typical month of 1925 less than 
60% of the plants were operating full time ; in typical months 
of 1926 and 1928, less than 73%. Even when the plants did 
operate full time, only a minority operated at full capacity. 
About one in three plants operated at full capacity in a 
typical month of 1925 and 1926 ; in a typical month of 1928, 
the proportion was only one in four. 

Soon after the 1930 census was taken, employment took 
the biggest dip in the history of the industry. Already in 
January, 1931, there were more than three times as many 
iron and steel workers unemployed as in the previous April. 2 
Instead of one in eight, one in three was totally without work. 
Utilizing figures of the U. S. Bureau of Labor Statistics, cor- 
rected by the figures of the Census of Manufactures, we 
find that the number of workers employed, whole time or 
part time, in iron and steel had decreased by April i, 1933, 
to 51.7% of the level at the date of the decennial census.* The 
totally unemployed at the beginning of April, 1933, num- 
bered about 280,000, as compared with some 223,000 still on 
the payrolls.** About 56% of the steel workers were totally 
unemployed. The U. S. Steel Corp. stated in the spring of 
1933 that it had no full-time workers at all on its payrolls. 
The industry was operating at about 14% of capacity, as com- 
pared with 19.41% for the whole of 1932. 

* See Appendix V. 

** Charles M. Schwab told the American Iron and Steel Institute 
on May 25, 1933, that the steel industry had been able to carry on its 
payrolls 200,000 more employees than would have been needed if those 
who were retained had been worked on a full-time basis. It would 
be interesting to know how this figure was arrived at 


Some Causes of Unemployment 

Booms and depressions, or in the language of the econo- 
mist, cyclical fluctuations, are the great overshadowing men- 
ace to the steel worker's job. Operations have been less 
steady since the formation of the U. S. Steel Corp. than they 
were before. The causes of unemployment are not quite the 
same for the several branches of the heavy industry. Nearly 
all of the unemployment and under-employment in the steel 
mills proper (open-hearth furnaces and Bessemer converters) 
may be traced to the ups and downs of business. Most of 
the joblessness in the production of pig iron and rolled 
products is due to the same cause; but in these two depart- 
ments there is also some unemployment which is directly due 
to overcapacity.* There is still some seasonal unemploy- 
ment in blast furnace operation, but little or none in the later 
stages of the industry. 

Economists point out that the maintenance of iron and 
steel prices in the crisis has been a major factor increasing 
the duration of the crisis. The prices of certain raw materials 
at the end of 1932 were inordinately high compared with 
other factors in manufacturers' costs, and these prices had to 
come down before producers could produce profitably. Iron 
and steel, electric power, paint and cement were the offending 
commodities. The selling price of these four classes of goods 
dropped only 15 to 25% from 1929 to the end of 1932, while 
prices of other raw materials fell an average of 35 %. s 

Fluctuations have been due to policies of the employers. 
In 1912 the U. S. Commissioner of Labor wrote, "It is a fixed 
and characteristic policy of the iron and steel industry to 
operate each producing unit to its fullest capacity and for 
the maximum number of working hours during a period of 
active demand and as soon as there is a decline in the market 
to shut down completely." 4 As recently as March, 1932, 

* See Appendix VI. 


the Iron Age was complaining that buyers of steel goods 
were insisting on delivery within a very short time, so that 
men were working overtime when there was only a single 
order on the books. 

It has been the regular custom to run blast furnaces stead- 
ily, Sundays included, from the time they were blown in until 
they were forced to shut down for lack of orders, or until 
they had to be relined. This custom must be put down to 
the management's lack of inventiveness, not to any technical 
necessity. As long ago as 1849 a blast furnaceman discovered 
how to bank down a blast furnace over the week end, but 
the practice died out and the mill managements did not revive 
it until after 1930. 

Another habit of the industry has been to make a drive 
for record production in March, and sometimes also in Octo- 
ber, except in years of deep depression. The writer partici- 
pated in one of these March drives, which took place on a 
declining market and was followed immediately by staggered 
employment, layoffs and an inactive summer. 

Like the blast furnaces and steel mills where they work, 
the steel workers stand idle when orders decline. The steel 
worker has a relatively small chance of dovetailing his occu- 
pation with some other. The steel community is typically 
isolated from other types of industries, sometimes as the 
result of a deliberate policy of the company, so that the 
worker will have considerable ground to cover before getting 
to an alternative place of employment. But more important, 
employment fluctuates in the average producing industry in 
almost exact synchronization with employment in iron and 
steel. Thus the steel worker who is the victim of cyclical 
decline in steel may as well whistle for a job in any other 
industry. Just at the time he joins the reserve army of labor 
the flow into that army from other directions is on the 


Who Are the Unemployed? 

Does unemployment hit the young or the old hardest? Is 
it worse for Negroes and foreign-born than for the native 
whites? Is it greater among the laborers than among the 
skilled and semi-skilled? 

We must distinguish the period since 1930 from the nine- 
year period preceding. The census of 1930 gives us a pic- 
ture of what has been considered "normal" unemployment. 

In "normal" times, the employer has valued workers for 
their strength and experience. The best combination from 
his point of view has apparently been reached when the 
workers were in their early thirties. Unemployment has been 
least among workers 30 to 34 years old. The proportion of 
unemployed has risen slowly as one approached the upper age 
levels, and rapidly as one approached the lower age levels. 
Workers 25 to 29 have shown about the same proportion of 
unemployment as workers 40 to 44; but workers 20 to 24 
have shown more, and workers under 20 very much more 
unemployment in proportion to their numbers, even than 
workers of 65 and over. 

In the "productive" departments of the steel industry, as 
in the service departments of railroading, there is a ladder of 
promotion. It extends, supposedly, from the labor gang to 
the highest-paid tonnage jobs. In filling the higher jobs, the 
bosses sometimes observe the principle of seniority, and the 
workers have a tradition that the bosses ought to make all 
promotions on that basis. The bosses justify their selec- 
tions, when these are out of the "regular" order, on the 
basis of the greater "efficiency" of the workers chosen that 
is, when the bosses feel called on to make any justification at 
all. But the workers know that favoritism and graft account 
for a large proportion of the exceptions. Promotions go to 
the friends and relatives of the bosses, and to the workers 
who are willing to pay bribes. 5 The same discrimination 

The New York home of Chas. M. Schwab, Chair- 
man of the Bethlehem Steel Corp. 

The "Home" of a Bethlehem Steel Corp. Worker in 
Johnstown, Pa. Two three-room dwellings are con- 
tained in this ramshackle house. 


between individuals, and for the same reasons, is shown in 
the matter of layoffs. "Promotion according to seniority" 
was one of the demands in the great steel strike of 1919; 
and layoff according to seniority, while it solves nothing re- 
garding unemployment viewed in the large, is a privilege 
which the older workers feel they have earned. 


In Occupations Including Two-thirds of All 

Steel Workers * 

(Source: Compiled from i$th Census of the U. S. (1930), 
Unemployment, Vol. II, Chap. I, Table 7.) 

Age Per cent 

Group Unemployed 

10-19 19.6 

20-24 15.0 

25-29 11.2 

30-34 10.4 

35-39 10.9 

40-44 11.3 

45-49 12.1 

50-54 12.5 

55-59 13-8 

60-64 14.3 

65 and over 14.9 

All ages 12.5 

As would be expected in an industry where seniority plays 
some role in layoffs, unemployment at the census date in 
1930 and probably before and after was more severe 
among the laborers than in other occupations. The percent- 
ages unemployed in each group were : laborers, 13.6% ; rollers 
and roll hands (metal) mostly skilled io.S% ; operatives, 
not otherwise specified (an intermediate group), n.o+%; 

* Furnace men, smelter men, puddlers, etc.; rollers and roll hands 
(metal) ; and blast furnace and steel [and] rolling mill operatives and 
laborers not otherwise specified. The first two occupational groups 
contain some workers from other branches of industry. 


and furnace men, smelter men, etc. (a miscellaneous classifi- 
cation including skilled and semi-skilled and a few unskilled), 
n.o %. 

However, this rule did not hold universally. In Pennsyl- 
vania, unemployment was more severe among the rollers and 
roll hands (14.5%) than among the laborers (13.8%), and 
in Indiana unemployment was more severe among the opera- 
tives not otherwise specified (9.3%) than among the laborers 


(Source: Compiled from i$th Census of the U. S., Unemploy- 
ment, Vol.. II, Chap. I, Table 7.) 

Per cent of Males Unemployed 
April i, 1030 

Native born 

Occupation Total White White Negro 

Furnace men, smelter 

men, puddlers, etc. ... n.o u.o 10.7 13.2 

Rollers and roll hands 

(metal) 10.8 u.o 10.4 12.3 

Operatives (n.o.s.)* ... 11.0+ n.6 10.3 9.6 

Laborers (n.o.s.)* 13.6 14.7 12.8 13.7 

* Not otherwise specified. 

Unemployment has "normally" been less among the for- 
eign-born white than among Negroes or native whites. It has 
also been less among Negroes than among native whites, 
in the two occupation groups where most of the Negroes 
have been found (laborers, and operatives not otherwise 
specified). It must be remembered that many of the Negroes 
are employed in Alabama and Maryland, where it is excep- 
tional for Negro and white workers to hold exactly the 
same job, so that conditions are different for these two 
the difference in unemployment between Negroes and for- 


eign-born on the one hand and native whites on the other, 
especially among the unskilled laborers, may be explained 
on the basis that the foreign-born and Negroes, being com- 
paratively recent arrivals in the industry, move along when 
they lose their jobs. Some may even return to the farming 
life they came from. The native whites are fixtures in the 
industry as a rule. 

As was to be expected, the increase of unemployment was 
greatest between April, 1930, and January, 1931, among the 
laborers, next greatest among the intermediate groups (opera- 
tives not otherwise specified) and least among the skilled 
workers (rollers and roll hands, metal). The increase was, 
laborers, 217% (that is, more than three times as many unem- 
ployed at the latter date) ; "operatives," 212% ; and rollers 
and roll hands, 172%. The miscellaneous group of "furnace 
men, etc.," for some reason showed an increase of 260%. 

Among the laborers, the most homogeneous group that is 
classified by the Census Bureau, the mass layoffs of the last 
eight months of 1930 hit the Negroes in the mid western area 
harder in proportion to their numbers than the foreign-born 
whites, and the foreign-born harder than the native whites. 
The increase in unemployment between April, 1930, and 
January, 1931, amounted to 216% among the Negroes, 212% 
among the foreign-born, and 203% among the native-born 
whites. This difference is not as great as might have been 
expected. When all the four occupations that contain the 
bulk of the steel workers are considered together, it is found 
that the increase in unemployment during this period of mass 
layoff was 210% for native whites, the same for Negroes, and 
215% for foreign-born whites, 6 who, it will be remembered, 
showed the least unemployment of any of the three groups 
in April, 1930. 

The figures just cited show that Negroes and foreign-born 
were not selected for mass layoff in the first phase of the 
crisis. There is a widespread impression to the contrary 


effect. Workers from the field cite instance after instance 
where there was discrimination in favor of native whites. 
These workers insist, that at any rate in the later stages of 
the crisis, Negroes and foreign-born were victimized. How- 
ever, a moment's thought will show that mass layoffs of one 
race or nationality would be contrary to a policy of the em- 
ployers which they consider of really crucial importance 
that of splitting the ranks of the workers. If all the Negroes 
in a given plant were laid off, it would be that much easier 
for the remaining workers to get together, since there would 
be no difference in color for the bosses to invoke.* So it 
appears that the mixing of races and nationalities in the steel 
plants is just as marked to-day (1933) as it was before the 

Employers' "Relief" for Unemployed 

The idea that the workers in an industry have a claim on 
that industry for a livelihood is an idea traditionally foreign 
to capitalistic habits of thought. But the desire to avoid 
"labor disturbances" is always present in the mind of the 
employer. Read, for example, the summary chapter of a 
recent (1930) study on Lay-off and Its Prevention by the 
National Industrial Conference Board. There it is stated: 
"If . . . the period of reduced earning power is protracted, 
or the curtailment is progressively severe . . . the whole la- 
bor force may become dissatisfied and even lend itself to labor 
agitation, as has been the case in notable instances" (P. 78. 
Emphasis not in original). No stronger evidence than this 
passage could be presented for the contention that mass pro- 
test is effective in forcing immediate concessions from em- 
ployers. It is primarily the militant protest of discharged and 

* The above is written in full awareness of the fact that some plants 
have closed their doors to Negroes from the beginning-. The superin- 
tendent of the Wisconsin Steel Co. plant in South Chicago will not 
have Negroes in the plant because he doesn't like them. 


part-time workers, that has forced some concessions from 
employers in the iron and steel industry in the matter of relief 
for laid-off workers. 

A rather obvious way of preventing distress among dis- 
charged workers, at least for a time, is to present them with 
a "dismissal wage," or separation allowance as it is sometimes 
called, if and when they are laid off without notice. Such 
allowances are the rule in certain capitalist countries of conti- 
nental Europe. In the United States steel industry, only the 
American Rolling Co. and the Bethlehem Steel Corp. have 
ever reported payment of such allowances, and each of these 
companies only at one plant at one particular time. The sole 
concession usually made to a worker summarily fired, is that 
he gets paid off immediately, whereas if he quits voluntarily 
he has to wait till pay day for his accrued wages. 

The Stagger Plan 

When the great crisis hit the iron and steel industry, the 
main technique which the industry had developed for meeting 
distress among the workers was the so-called stagger plan or 
share-the-work scheme. From the point of view of the em- 
ployer, this plan had three separate advantages: (i) it re- 
duced to a system the support of workers by each other, so 
that demands on the company for relief, either direct or in 
the form of demands for contributions to public or other 
charitable agencies, were likely to be minimized ; (2) it kept 
attached to the job ready for full production a maximum 
number of experienced workers; and (3) it kept these work- 
ers from getting "soft." * 

* "The terrific heat and speed-up in the Bethlehem Steel Co. Blast 
Furnace at Bethlehem almost killed three workers on September 4th. 
These workers had been laid off for many months and recalled to work, 
but starvation in the ranks of the unemployed had weakened them so 
that they were unable to stand the pace in the mills. One is in the 
hospital in a very serious condition." ("A Steel Worker," in Labor 
Unity, September 19, 1931.) 


The workers were in no position to meet the crisis out of 
their own resources. The stagger plan of rotating employ- 
ment, which was officially endorsed by Pres. Green of the 
American Federation of Labor and Pres. Hoover, had been 
in use on a large scale for many years in some of the older 
centers of the industry even before 1929. In the U. S. Steel 
plants along the Monongahela River in Western Pennsyl- 
vania, which plants were rebuilt and "modernized" after the 
war on a huge scale, the number of workers required to man 
the mills decreased so suddenly that the company apparently 
did not dare to fire all the workers outright. In this district, 
as in many others throughout the country, the steel workers' 
savings at the beginning of the crisis were all but non- 

(As the crisis deepened and the number of totally unem- 
ployed mounted, the part-time workers came to form a larger 
and larger percentage of the workers still on the payrolls. 
From figures issued by the U. S. Steel Corp. it may be com- 
puted that workers on part time were 67% of the firm's 
"employed" workers in March, 1931, 75 % at the end of 
1931, and 88% on the average during 1932. In March, 
1933, the company's chief executive announced that the firm 
had practically no full-time workers at all. 

The stagger plan takes various forms. Some companies 
(e.g., Bethlehem, Colorado Fuel & Iron Co.) have used the 
6-hour shift on continuous processes; one (Corrigan-McKin- 
ney at Cleveland) is stated to have used the 4-hour shift on 
its blast furnaces. More usually, a man works one or two 
days a week and then gives way to another man; or, when 
the plant is operating only one or two days a week, two men 
work alternate weeks. 

For a time in the Youngstown area, the plan was tried 
(e.g., by the Republic Steel Corp.) of having two full crews 
on the job in the hot mill spelling each other off, the com- 
pany paying each crew for only half a shift's work. The 


workers kicked so much that the company modified the 

If a man is working on the stagger plan, even if he puts in 
only one day a month, he is not entitled to any unemployment 
relief, in the view of the steel companies. U. S. Steel has 
even forbidden its employees to apply to any charitable or- 
ganizations for relief, as long as they are still carrying the 
company's employment check. 7 This edict was in pursuance 
of the policy put forward by Myron C. Taylor, chairman of 
the company's finance committee, at the American Iron & 
Steel Institute sessions in October, 1930. Taylor urged, 
"Let it be said of the steel industry that none of its men was 
forced to call upon the public for help." 

The stagger plan has been used by some superintendents 
to stir up the workers against each other and split their ranks. 
A worker from Youngstown, Ohio, reports the following in- 
genious plan in the mills of Youngstown Sheet & Tube : 

Starting with the galvanizing department, the boss came to the 
workers and said: "There are 60 men in this department and 
we have work for only 40 on the double-up [stagger system] 
time. Twenty men will work the first three days and twenty will 
work the second three days. We will pick the first twenty and 
these men will give their jobs to whoever they want for the 
second three days, out of the forty men left." 

The boss then selected the 20 men who were to work the first 
three days and these men naturally gave their jobs to their friends 
after they had finished their time for the week. This meant that 
20 men were left without any work at all for the week. 

Many of the men got sore at the men who worked the first part 
of the double-up for not giving them the three remaining days' 
time. In fact several fist fights took place by some of the more 
backward men who could not see that this is exactly what the 
company wanted to happen. 8 

At the billet mill of the Illinois Steel Company's South Chi- 
cago works, there were in the spring of 1931 too few air hoses 
for all the chipper s, and some workers came as early as 5 A.M. 


to be sure of getting a hose and thus a day's work. There was 
some feeling among the workers at Sparrows Point because 
the best and heaviest orders seemed all to be going to certain 
mills, while other mills got all the light orders with a poorer 
grade of steel. 9 Of course, whenever there is work to be 
distributed arbitrarily, favoritism crops up, compared with 
which the organized stagger system seems almost preferable. 
So far did the Youngstown Sheet & Tube Co. carry the 
policy of having a huge reserve army always at its gates that 
it hired considerable numbers of workers at the most intense 
point in the crisis, even though they had to wait thereafter 
for employment as much as four or five months. This com- 
pany had, in October, 1932, 23 workers on its payroll for 
every ten jobs. The following April the Republic Steel Corp. 
had on its payroll 25 workers for every ten jobs. Late in 
1932 the steel companies in the Youngstown area announced 
that they would guarantee $20 a month minimum wages to 
all employees. Even this promise was never carried out in 
any thoroughgoing way. In the Youngstown district it was 
at one time fairly common for men to be called to work, and 
then sit around in the wash rooms for the whole turn and be 
sent home without a cent. 

Company "Relief 

Even the first winter of the crisis brought so many cases 
of complete destitution among the steel workers that it be- 
came evident to the big companies that they would either 
have to give relief themselves, or contribute to the local chari- 
ties on a much larger scale than formerly, if food riots and 
demonstrations were to be avoided. Their policy has been 
to keep power over their own employees in every way pos- 
sible. They have created a little "made" work; they have 
given credit at company stores; they have given relief to 
workers having their employment checks ; they have fostered 
employee gardening and taught the women how to bake their 


own bread and sew their own clothes ; and when forced by 
overwhelming public sentiment to contribute to the local 
charity, they have made a large part sometimes the whole 
of the contribution out of "voluntary" collections from the 
workers in the mills. 

The breakdown of the stagger plan as a means of provid- 
ing support for the 7,000 steel workers in the Lackawanna 
plant near Buffalo was officially admitted by the Bethlehem 
Steel Corp. in December, 1931. At this time it was an- 
nounced that the company would give relief work to all its 
Lackawanna employees who were receiving less than a living 
wage. A Federated Press reporter investigated a month 
later, and found just 250 men who had been given relief 
work, tearing down three old mills. 

Typical of the firms having company stores is the Jones & 
Laughlin Steel Corp., which allows credit to employees only 
so long as they are working* Of course the amount ad- 
vanced at the store is checked off of the worker's pay until 
the debt is extinguished. Sometimes it never is extinguished. 
In Birmingham, Ala., where the system of company stores 
and company houses is very extensive, the writer has run 
across families which were caught in the net of the stagger 
and credit system even before the crisis and had not had any 
cash in years. Everything was supplied on credit by the 
company a carryover into industry of the infamous share- 
cropper credit system. The company store booms in depres- 
sion, since workers have not enough cash to buy at the 
(cheaper) chain groceries. The Lukens Steel Co. of Coates- 
ville, Pa., has given no relief at all, so that its workers, on 
part time, will be years in paying off the huge debts they are 
accumulating at the company ("cooperative") store. 

A number of the larger companies had set up their own 

* Both this company's plants are located in Pennsylvania, which has 
a law prohibiting company stores. The company gets around the law 
by having the same people own the steel company and the stores. 


mechanism for poor relief already before the crisis. Thus 
the Illinois Steel Co. established in Gary in 1913 the W. P. 
Gleason Welfare Center, named after W. P. Gleason who 
in 1933 was still general superintendent of the company's 
Gary works. This center has distributed relief in the crisis. 
In addition, this company maintains at each plant a Good 
Fellows Club, which has as part of its program the relief 
of necessitous members. Dues for the Good Fellows Club 
have been checked off the wages of the members, and in some 
of the works the men did not dare not to join ; membership 
was virtually compulsory. 

One feature of this relief work carried on under company 
auspices has been that it brought the company officials actually 
into the homes of the workers and enabled them to find out 
exactly how the workers were getting along. Thus in 
Indiana Harbor a committee of department superintendents 
headed by H. R. DeHoll, the general superintendent of 
Inland Steel, established an airtight monopoly on the handling 
of all relief applications from Inland Steel Co. employees, 
and the superintendents and foremen personally investigated 
every applicant, though this work was also performed as a 
matter of routine by Salvation Army investigators. 

In the Pittsburgh district in the winter of 1931-32 the 
Jones & Laughlin Steel Corp. was giving $2.10 a week to the 
families of "its" unemployed workers, and the Carnegie Steel 
Co. $3.00. But the companies decided that they were paying 
too much relief. They revised the relief scale. A Home- 
stead worker reported in November, 1932, that the Carnegie 
Steel Co. was dispensing to "its" workers relief tickets worth 
$1.90 one ticket a month to a single man or a married man 
without children, one every 3 weeks to a man with I to 3 chil- 
dren, and one every 2 weeks to a man with more than 3 
children. The companies also called in a number of employ- 
ment checks, thereby throwing some thousands of workers 
onto the county. Discharge did not necessarily mean greater 


immediate hardship for the workers, who often got more 
from the public agencies than they had been getting from 
the companies, even when employed. 

In Gary, thousands of steel workers' families were ex- 
pected to live on $1.75 a week in the summer of 1932. The 
chief breadwinner was getting one day's work every two 
weeks, and was forbidden to apply for charitable relief else- 
where. The U. S. Steel Corporation's order forbidding its 
employees to apply to public agencies for relief has neces- 
sarily been disregarded by many workers, who preferred the 
chance of losing their (half of a) job to actual starvation. 
The families that managed to get onto public relief received 
from $2 up a week depending on the size of the family. In 
the neighboring steel town of Indiana Harbor, the maximum 
scale of public relief was, in 1932, $14 a month, irrespective 
of the size of the family. Most of the steel companies, in- 
cluding some of the largest, have given no relief at all in the 

The net result of the changes introduced by the companies 
in 1932 was to increase the proportion of relief furnished in 
the form of a loan and to decrease the proportion furnished 
as a gift. Not that the sums advanced as gifts in 1931 were 
large. The U. S. Steel Corporation, for example, advanced 
to the workers in that year only $9.64 per part-time worker, 
and of this only $3.08 was an outright gift from the company. 
The Good Fellow Clubs advanced an average of $1.26 
per worker; the company does not mention in its annual re- 
port the fact that these clubs are financed almost entirely by 
deductions from the workers' wages. The remainder of the 
$9.64 $5.30, or 55% of the total was advanced in the 
form of a loan. But see how this proportion increased in 
1932. Whereas outright gifts increased only about 20% 
from $470,689 to $577,216 and advances through the Good 
Fellow Clubs and other welfare organizations in about 
the same proportion from $173,876 to $218,711 the loans 


to employees more than trebled. The sum rose from $801,- 
484 in 1931 to $2,690,037, and the proportion from 55% of 
the total advances to 77%. The new policy was adopted also 
by other steel companies. Any one who has observed the 
consistency with which loans are collected from employees, 
by being checked off their wages, will agree that the com- 
pany's loss on this account is likely to be small. 

The companies finally seem to have become alarmed at the 
size of the reserve army they had succeeded in building up, 
and set about to demobilize a part of it. The "back-to-the- 
land" movement was a unique product of the crisis. The 
movement was carried out in different ways according to 
where the workers came from. If from abroad, then the 
companies collaborated with the efforts of Secretary of Labor 
Doak to deport the workers. The companies even allowed 
Doak's agents to come into the plants and ferret out the 
foreign-born. If from Mexico, then the steel companies col- 
laborated with the railroad companies in removing the work- 
ers wholesale to their native land. It is reported that 2,500 
Mexicans, many of them steel workers, were thus sent south 
from the Calumet region in 1932. 

Although the companies have not actually removed many 
of the American-born to the farms, some of the company 
spokesmen have made it quite plain that they expected former 
farm workers to return home in the crisis. Myron C. Taylor 
of U. S. Steel told the Boston Chamber of Commerce that 
"it [was] difficult to see how in the existing situation the large 
number that had migrated to the cities [could] all get work 
at fair compensation, while, on the other hand, the vast pro- 
ductive land areas of the country [were] offering opportunity 
for a more widely distributed self-sustaining population." 10 
He did not mention the fact that his company had advanced 
thousands of dollars as late as 1923, in order to bring farm 
workers to the mills. 


For resident workers the larger companies, aided in some 
states by legislation, have evolved a "feed-yourself" program 
of gardens. The garden allotments furnished to steel work- 
ers by company or community have not been a source of wel- 
come diversion to the workers; they have been a matter of 
grim necessity. Some part-time workers have been threat- 
ened with outright discharge if they did not raise their own 
vegetables. To the companies the gardens have been a tre- 
mendous help. The U. S. Steel Corporation is so pleased 
with their success that it plans to make the 6o,ooo-odd work 
gardens permanent. The company may be disappointed. 
Many of the steel workers would have been glad enough to 
cultivate a garden, already before the crisis. But they had 
no energy for it after a day in the mills. Also, it was hard 
to make anything grow in the immediate vicinity of the mills' 

The high point in "relief" from the business point of view 
was apparently reached in Sparrows Point, where a worker 
reports that colored families (mothers and children) were 
permitted to pick coke out of the cinders discarded by the 
company. This they did because, having been unable to pay 
rent in the company houses, their gas had been turned off. 
In return for the coke, they were expected to spread the 
cinders around in the places where the company (Bethle- 
hem Steel Corp.) wanted them. For this spreading work the 
company had formerly been accustomed to employ men at 
37 cents an hour. Thus its system of giving relief seems to 
have enabled the company to fire several more workers. 

The system of company relief, either direct or through the 
Good Fellows Clubs, has been intensely unpopular with the 
workers, who revolted in several places. Dues for the Good 
Fellows Club were deducted from the wages of workers at 
the South Chicago Works of the Illinois Steel Co. even after 
these workers had gone onto one or two days a week. A 


campaign against this system, conducted by the Steel & 
Metal Workers Industrial Union and the Communist Party, 
ended in a hunger march on the plant ; and the check-off was 
modified soon after. 

Charity and Public Relief 

The steel officials have gone actively into community poor 
relief, public and private, and in many towns have taken 
direct charge of it. From the federal unemployment or- 
ganization of 1931, which was headed by a member of the 
board of directors of U. S. Steel (Walter S. Gifford) and 
whose advisory board included two other directors of the 
same board (Samuel Mather until his death, and Myron C. 
Taylor), to the semi-rural steel towns like Donora and Far- 
rell, steel officials or their wives have doled out the miserable 
relief or served on the committees which have raised or ad- 
ministered the inadequate funds. 

The officials have had a very definite policy of making the 
workers pay, and this policy might not have been so easy to 
carry out if some one other than themselves had sat on the 
relief committees. A number of steel companies, of which 
the Central Alloy Steel Corp. (now a subsidiary of the Re- 
public Steel Corp.) is reported to be an outstanding example, 
do not even ask their employees to contribute to the Com- 
munity Chest; they simply deduct one day's pay and turn it 
over to the local Chest. Other companies instruct the fore- 
men to collect from one to three days' pay each from the 
workers, and then say that the men's contribution has been 
"voluntary." Many workers have contributed who knew at 
the time that they would be completely destitute before the 
end of the year, as in fact they were. If the foremen collect 
enough, the company sometimes contributes nothing at all 
(example, Wheeling Steel Corp. in 1931). The following 
table has been compiled by Harvey O'Connor of the Feder- 
ated Press to show the relationship between company profits, 


surplus and assets in 1930 and company gifts to charity 
chests, in Pittsburgh in 193 1. 11 

Profits Surplus, Assets, Gift, 

Corporation 1029 1930 1930 1930 1931 

A. M. Byers ... $ 1,977,000 $ 1,133,000 $ 5,218,000 $ 25,954,000 $ 7,500 

Blaw-Knox Steel . 2,838,000 2,689,000 24,212,000 7>5oo 

Allegheny Steel.. 3,311,000 1,610,000 10,516,000 30,100,000 

Jones & Laughlin 27,639,000 15,013,000 74,749,999 219,583,000 60,000 

U. S. Steel, employing 45,000 in the Pittsburgh area through 
its Carnegie Steel Co. alone, gave a paltry $150,000 to this 
particular drive. Its surplus at the end of 1931 was stated to 
be $421,837,191. 

Contributions to Community Chest drives are admitted to 
be good business for the companies even by the Bureau of 
Internal Revenue in the Federal Treasury Department, which 
permits companies to deduct from their gross income for tax 
purposes, contributions to Community Chests and like or- 
ganizations. The bureau finds that the corporations may 
expect to receive a benefit commensurate with the amount of 
the contribution. 

But the steel companies do not, as a rule, contribute to the 
private charitable agencies as much as these agencies lay out 
in the relief of the employees of these same steel companies. 
In the crisis, when public relief assumed larger proportions 
relatively to private, the amount of money expended by the 
public authorities for the relief of steel workers was some- 
times less than the whole amount the community received 
from the steel employers as taxes. During a debate in the 
Maryland House of Delegates early in 1933 on an unemploy- 
ment insurance measure introduced under pressure from the 
working class, Miss Lavinia Engle, member from Mont- 
gomery County, stated that the Sparrows Point steel industry 
"cost the taxpayers of Maryland $200,000 a year in public 
money, to carry the families of men turned out [by the Beth- 
lehem Steel Corp.] and told to go to the charitable agencies. 
Families of 1,231 of its employees," added Miss Engle, "arc 


now under the care of public welfare agencies." 12 The bill 
passed the House and failed in the Senate by only three votes. 

The steel companies seem to have contributed to charity 
only because it was cheaper to do so than to carry on relief 
work themselves. Thirteen steel firms of national importance 
contributed to community chests an average of $17,000 from 
each firm in 1929, $14,200 in 1928, $13,500 in 1927, $13,200 
in 1926 and $12,300 in I925. 18 These niggardly amounts 
were evidently fixed in pursuance of a policy (which the Na- 
tional Bureau of Economic Research finds to be general 
among private corporations) of contributing to charitable 
organizations only when these have been carrying on work of 
direct service to the company's employees. 14 

The winter of 1930-31 was the worst the steel workers had 
seen since 1914. That of 1931-32 was far worse, and before 
the coming of the memorable winter of 1932-33 whole steel 
communities had sunk into poverty, and were totally depend- 
ent on public agencies, which meant on federal relief a fair 
indication of how the "American standard of living" had 
gone completely to pieces in the crisis. 

The steel workers, although profoundly dispirited by years 
of part-time work, did not lose their fighting spirit, and in 
the winter and spring of 1932-33 a number of local demon- 
strations including both employed and unemployed workers 
set the authorities of the Pittsburgh, Youngstown and other 
districts by the ears and forced the granting of more relief 
by the county. These movements were led by the Unem- 
ployed Councils, the Steel and Metal Workers Industrial 
Union, and a number of smaller groups (Unemployed Citi- 
zens' Leagues, Associations of the Unemployed, and so on). 

Pittsburgh was by no means the worst hit of the steel 
cities. In that city at the end of 1932, the allowance for food 
in families of three or more was oxx per person per week, 
supplemented by a little milk and flour. The local charities 
(the Public Health Nursing Association and the Family Wei- 


fare Association) tried to pretend that this was enough to 
keep the families in health. But Helen Glenn Tyson, assist- 
ant welfare commissioner of Pennsylvania, described it early 
in 1933 as a "starvation diet." "In many instances/' she told 
the U. S. Senate Committee on Manufactures, "where work 
has been found for men it has been discovered that they were 
too weak to perform it." 

The jobless, starving steel workers, plodding through the 
darkening streets of an evening, past a mill that was working 
part time, could occasionally see the gates open to let out a 
procession carrying the unconscious body of a man a 
worker, collapsed from overwork ! 




IRREGULARITY of employment in steel is nothing new, and 
speed-up has been only intensified, not invented, in the post- 
war period. The new feature of the present situation is that 
steel workers feel themselves squeezed in the vise of declin- 
ing jobs. 

The reason is that capitalism, based on the private owner- 
ship of the highly developed means of production which turn 
out a mass of commodities not for use but for profit, has got 
itself tangled in a maze of contradictions from which it is 
unable to find any escape. It has passed the progressive stage 
and entered a period of decline. 

In this twilight period of world capitalism, when markets 
appear saturated and huge industrial giants remain sporadi- 
cally idle, certain tendencies of industrial production come 
sharply into view. They may even be blamed for the situa- 
tion that has really been created by capitalism itself. Thus 
the introduction of new machinery and processes, which re- 
sults in greater output per worker, is blamed by some for 
the fact that steel workers who lose their jobs cannot get 
back into the industry, nor perhaps into any industry. But 
productivity of labor has not increased since the war any 
more rapidly than in many previous decades. 

Secretary of Labor Perkins recently pointed out that the 
wages of workers in steel works and rolling mills as com- 
pared with value added by manufacture declined from 57% 
of the value in 1923 to 47% in 1929. Horsepower used per 
wage-earner employed in the industry increased 42% from 



1909 to 1929. There is no doubt that the "organic composi- 
tion of capital" is changing, and that constant capital absorbs 
a larger proportion of the employer's outlay relatively to vari- 
able capital than was formerly the case. But this tendency 
too has long been characteristic of the heavy industry, even 
in the days when it was expanding most rapidly. The great 
difficulty of steel under capitalism is that its markets are 

The markets are limited, not by any physical satiety, nor 
because people would be unable to use more goods if they 
were produced, but simply and solely through the operations 
of the capitalist system itself. The workers are unable to 
buy back what is produced. Wealth accumulates in the 
hands of a few, who consume part of what they receive, waste 
a part, and reinvest the rest ; and the pyramiding of produc- 
tive equipment tends to outrun the possibilities of financial 
return on this equipment. Capitalism can continue function- 
ing only by means of periodic shut-downs during which a 
large part of the previously accumulated capital is wasted and 
rendered valueless. 

Capitalism has saved itself temporarily from the effects of 
previous crises by developing new markets both abroad and 
at home and more thoroughly exploiting old ones. To-day 
the world is fully divided up among the capitalist nations and 
all regions have been drawn into the orbit of one capitalist 
nation or another. Domestic markets have also been more 
fully exploited than ever before ; agriculture has become far 
more than ever before dependent on the demand of an inter- 
national market. All capitalist nations are caught in the same 
maze. They erect tariff barriers in a desperate effort to save 
home markets for their own capitalists, with the result that 
the foreign trade of all nations declines still further. 

Crises under capitalism get more serious the more fully 
capitalism develops. This is because the capitalist mode of 
production is itself the creator of crises. The present crisis 


has been the most widespread and the most serious in the 
whole history of capitalism. It has been accentuated by the 
fact that several leading nations never staged a real come- 
back from the after-effects of the war, and that agriculture 
in many capitalist nations was over-developed during the 
war and has been depressed ever since. 

The Soviet Union presents a striking contrast with the 
capitalist nations. In the Soviet Union, where the surplus 
wealth is used for the common good, workers form shock 
brigades with the idea of increasing output, and emulate each 
other in fostering inventions. In capitalist America, sabotage 
of production by employers has bred in the workers a certain 
cynicism regarding new improvements. 


Just how fast has physical output per man-year been 
increasing in steel ? The following table, compiled by Mere- 
dith B. Givens, shows how much more product is turned out 
by the individual worker to-day than formerly. 1 


(Source: Encyclopedia of the Social Sciences, "Iron & Steel Industry.") 

Steel Works and 

Blast Furnaces Rolling Mills Composite Index 

Year Gross Tons Index Gross Tons Index (1889=100) 
( 1889 = 100) ( 1889 = 100) 

i879 ... 3i 57 

1889 . 240 100 54 100 100 


370 154 82 153 153 

671 280 in 207 217 

716 298 97 180 192 

1707 711 138 257 284 

The U. S. Bureau of Labor Statistics calculates that produc- 
tivity per worker in blast furnaces increased 50 times between 
1850 and 1925.2 Man-hour productivity in the iron and steel 


industry as a whole increased between 1899 and 1925 by 
165%, according to the same authority. 8 

Horsepower used per wage-earner employed is a good 
index of the degree to which mechanical equipment has been 
introduced. In the heavy industry, the horsepower per wage- 
earner increased from 12 to 17, or 42%, between 1909 and 
1929. Only ten of the 329 industries in the United States 
use more horsepower per wage-earner than iron and steel, 
and of these two employ less than a thousand workers and 
two more, coke and cement, are almost a part of the steel 

Increased productivity of labor has been caused partly by 
the speedup described in Chapter IV, but chiefly by engi- 
neering improvements: more expensive machinery, better 
routing of materials, better integration of processes, and so 
on. Such engineering improvements may and may not in- 
volve greater physical effort on the part of the workers; in 
the main, as we have explained in Chapter I, the actual 
physical labor is probably becoming less arduous. However, 
speed-up increases the nervous tension of the job; and the 
exploitation of labor in the economic sense has never been so 
great as at the present time. 

Changes in Technique 

Will productivity continue to increase at the same rate of 
speed? There are some who doubt it. Prediction is always 
dangerous. But we do know that seemingly impossible im- 
provements in technique have been accomplished in the past. 
Passing over, as we necessarily must, the record of mechani- 
zation on the Iron Range where great steam shovels pick up 
20 tons of ore at a bite, and on the ore docks where 12,817 
tons have been unloaded from the ore pockets to the hull of 
a Great Lakes steamer in 16^2 minutes, and leaving on one 

* Figures as of 1927. See Appendix VII for table, compiled before 
1929 and 1931 figures became available. 


side also the technical changes in coal mining 1 , transport and 
coke-oven practice, let us consider in order technical improve- 
ments in the three main sections of the heavy iron and steel 
industry blast furnaces, steel works, and rolling mills. 

Since 1880, when Julian Kennedy and Capt. William Jones 
discovered how to "drive" a blast furnace under heavy blast, 
the blast furnace has made tremendous technical advances. 
When the ore car reaches the blast furnace, it is picked up 
bodily, turned over, and dumped by a huge machine ; and an 
overhead crane with its grab bucket moves the ore from the 
stock pile to the bin. The ore runs into the larry car when 
it is wanted for the blast furnace. The larry-man pulls a 
lever to pour the ore into the automatic skip-hoist which 
takes ore, coke and limestone up to the top of the furnace 
and dumps them in. 

At the furnace front the tap-hole is plugged by the "mud 
gun," operated by compressed air. A great advance was 
made when a way was discovered of taking the molten iron 
direct from the blast furnace to the steel works and keeping 
it hot in the so-called mixer until it was wanted in the steel 
furnace. Sand-casting of pigs, a process involving much 
back-breaking work, is now used only for the higher grades 
of iron. For ordinary grades, the "pig machine" does the 

Inventors still dream of making steel direct from iron ore, 
but so far no successful method of accomplishing this feat is 
known.* An interesting experiment is Prof. William Smith's 
low-temperature oven, requiring no coal or coke, which was 
first announced in 1928. This process is being exploited by 
the General Reduction Corp. of the United States. Some 
also foresee possibilities for blast-furnace operation in the 
high-temperature furnace of Dr. E. F. Northrup of Prince- 

* However we must not omit to mention the Buffalo hollow-electrode 
furnace, which is said to have shown that the problem can be solved. 


ton, who in an experiment has created a temperature of 3,600 
degrees Centigrade and vaporized rocks. 

Steel had been made from iron for many hundred years by 
the laborious process of cementation, when the so-called Bes- 
semer process was developed simultaneously in several plants 
at once during the eighteen-sixties. It is named after Sir 
Henry Bessemer, who first put the process on a commercial 
basis. Molten iron is poured into a tilted crucible or con- 
verter with a perforated bottom. The converter is then 
raised upright and air blown through the holes in the bottom 
and up through the iron. The oxygen unites with the impuri- 
ties in the iron and burns them out one after the other, after 
which carbon is added and the resulting steel poured 
(teemed) into molds. 

The Bessemer process is cheap and rapid but does not per- 
mit the use of iron and steel scrap, which is becoming in- 
creasingly important as a raw material for steel. Also the 
chemical composition of steel made by the Bessemer process 
is difficult to control. For these and other reasons the open- 
hearth furnace is increasingly used for steel-making, usually 
alone, but sometimes in order to put the finishing touches on 
steel made by the Bessemer process. This double treatment 
is called the duplex process. 

The open-hearth furnace uses gas almost universally as its 
fuel. It was formerly stationary, but the development of 
flexible ports for the gas has made it possible to tilt the 
furnaces by machinery. The heavy job of charging has also 
been taken over by the machine, and most of the lifting and 
carrying here and throughout the industry, is done by over- 
head cranes. 

The electric furnace, which was put on a commercial basis 
in America about 1910, is probably only at the beginning of 
its development. Its high temperatures, under accurate con- 
trol, are especially useful in the making of alloy steels, al- 
though the expense involved is still great enough to prevent 


the use of any but small-scale furnaces. The electric process 
has taken over the manufacture of the so-called crucible steel, 
and electric steel manufacture is growing much more rapidly 
than open-hearth steel manufacture which as noted is sup- 
planting Bessemer. The production of steel in electric fur- 
naces increased 463% between 1916 and 1929 while the 
production of steel by all other processes was increasing 30%. 
Electric furnaces have been especially popular on the Pacific 
Coast where there is cheap electricity but no good coking coal. 
The Bosshardt furnace, which was introduced in the United 
States in 1931 after having been used for ten years previously 
in Germany, develops a temperature of between 3,600 and 
4,000 degrees Fahrenheit, several hundred degrees higher 
than can be commercially developed in an electric furnace of 
the usual type. It is used for making direct castings of steel. 
Some foresee the development of electric blast furnaces. 

From the steel furnace or converter the ingots are run off 
to the "soaking pits" (underground gas-heated chambers), 
where they remain while the heat becomes evenly distributed 
throughout their mass. This operation is necessary because 
the present conditions of teeming make it impossible to 
secure uniform heat all the way through an ingot and there is 
danger of imperfections in the steel. But a new process of 
running the steel into a revolving mold (the "centrifugal 
ingot" process) is said to make it possible to eliminate not 
only the soaking pit but even the first rolling mill to which 
the ingot is ordinarily brought, where the ingot is rolled to a 

In the rolling mill the economic pressure is always for the 
development of a continuous mill which will pass the red-hot 
metal only once through each pair of rolls and carry it right 
through to the finished or semi-finished product with no 
reheatings. Continuous mills were developed comparatively 
early for steel rails and comparatively late for sheets and 
plates. The completely mechanized plate mill in which the 


product is not moved by man-power at all from entrance to 
exit has recently been perfected. Ninety per cent of all sheets 
are now made by some continuous or semi-continuous process. 
At the American Rolling Mill Co.'s Ashland mill 20 workers 
produce as much tonnage as 360 could turn out with the old 
hand-rolling process. 

Live rolls, platforms that raise and lower, straightening 
machines, wire-drawing machines, and other ingenious con- 
trivances now do most of the work in the rolling mill. Even 
inspection of the finished product is being turned over to 
X-rays and photoelectric cells. 

The wrought iron industry, which declined with the rise of 
steel, staged a temporary come-back in 1929 when Aston 
developed a new and much more efficient process for the 
A. M. Byers Co. The hand-puddling plant had employed 
400 workers and turned out 4,000 tons a month. The me- 
chanical puddling plant employed 150 workers and turned 
out 4,500 tons a month. It should be added, however, that 
the workers in the mechanical plant were working twelve 
hours a day, as against eight in the hand-puddling mill. 

The electric arc weld has been an invention of great im- 
portance to the iron and steel industry, especially to pipe 
manufacture. The A. O. Smith Corp. of Milwaukee was 
producing 32 miles of pipe a day within a short time after 
it perfected this welding process. 

Steel has heretofore been rolled to give it shape and tough- 
ness. But with the introduction of tougher alloys, engineers 
have been working on a rival principle, that of extrusion. In 
this method, molten steel would be admitted through a valve 
into a chamber, and from there forced through a die of the 
desired shape to any desired length. The changing of dies 
would be a far simpler process than changing rolls, which 
now requires anywhere from 20 minutes to three hours. 

Advances in chemical knowledge have been of great im- 
portance to steel. During the period of railroad building 


which ended- about 1906, the year when production of steel 
rails reached its all-time peak, the demand for steel tended 
to outstrip the supply, and the cry was for more tonnage. 
Since the rise of motor transportation there has been more 
and more emphasis on getting lighter and stronger steel. 
Several newly discovered and comparatively rare metals have 
been alloyed with steel in varying proportions, thereby giving 
it new and superior qualities. The industrial discovery of 
molybdenum steel, for instance, is said to have made possible 
the mass production of automobiles and airplanes. The auto 
industry took no less than 84% of the total production of 
alloy steels in 1931. 

Rust, which is more important than wear in using up steel, 
is due mainly to impurities in the product. The so-called 
Armco iron from which nearly all impurities have been re- 
moved, and stainless and rustless steels, invented just before 
the war and greatly developed since, have all but solved the 
problem of rust. So less steel will be needed in the future for 

The search for new ways of dispensing with workers is 
going actively on. Some of the smaller specialty firms, such 
as the A. O. Smith Corp. and the American Rolling Mill 
Co., have always emphasized research as an essential factor 
in their set-up. The A. O. Smith Corp. employed in 1928 a 
staff of 600 engineers. It planned to amortize its fixed invest- 
ment in new plant in not longer than a year.* The larger 
firms have lagged in research heretofore. They have made 
sweeping improvements in plant, but usually by way of en- 
larging the scale of the previous installation, or introducing 
some process perfected abroad. About 1924 several steel 
companies joined with the Department of Metallurgy of the 

*By 1933, however, the number of engineers employed had been 
reduced to about ten. On A. O. Smith's methods see "The A. O. 
Smith Corporation," article by Stuart Chase in Fortune's Favorites 
(New York, 1931), pp. 111-132. 


Carnegie Institute of Technology and with the Pittsburgh 
Experiment Station of the United States Bureau of Mines 
to set up a joint research bureau in Pittsburgh. U. S. Steel 
decided to set up its own research department for the first 
time in 1927 (though actual research did not begin until 
1929). The crisis has stimulated all the steel firms to greater 
activity in their search for ways of cutting costs, especially 
labor costs. New processes and appliances have been intro- 
duced ; workers have been driven harder ; and the few work- 
ers who were still employed in the crisis found their wages 
cut to the bone. 

The Market for Steel 

Up to the end of the war, the market for steel was ex- 
panding very rapidly. The rate of expansion of the market 
has been slowing up. The table shows that this slowing-up 
process has been very marked in recent years, even before the 
crisis, though production in 1929 set a new high record for 
all time. 

One reason why the market for steel may be expected not 
to develop as rapidly in future as it did for example before 
the war is that steel is now getting active competition from 
other minerals. So much has been written about the way steel 
replaces wood that we almost forget how aluminum is re- 
placing steel. Aluminum is derived commercially only from 
bauxite ores; but the potential reserves of this mineral are 
enormous. Alumina constitute 8% of the earth's crust while 
the various oxides of iron make up only 5%. Already the 
Alcoa Ore Co., subsidiary of the Aluminum Co. of America 
(Mellon), has put into service ten 7o-ton hopper cars whose 
bodies and under frames are constructed entirely from strong 
aluminum alloys and which have the strength of structural 
steel but weigh only one-third as much. Aluminum, especially 
in the form of duralumin, an alloy of aluminum, is competing 
with steel in the manufacture of automotive equipment, in 



building construction, and in the making of furniture and 
articles of household use. 

THE U. S., 1861-1931 

(Source: Computed from American Iron and Steel Institute, 
Annual Statistical Reports.) 

Pig Iron 

Average % increase 

annual over 

Production average 

(thousands of of previous 

long tons) decade 


Average % increase 

annual over 

Production average 

(thousands of of previous 

long tons) decade 

l86l-l870 I,l87 

I87I-I880 2,406 

l88l-l890 5,690 

1891-1900 9,812 

1901-1910 21,132 

191 1-1920 32,264 

1921-1930 34,084 






* Preliminary. 








t Decrease. 

Magnesium is another very widely distributed mineral. It 
weighs only two-thirds as much as duralumin and is as strong 
as steel. The Magnesium Development Co. was formed early 
in 1932 by the Aluminum Co. of America and the I. G. 
Farbenindustrie A. G. of Germany to develop and utilize the 
commercial possibilities of magnesium. The company will 
presumably be backed by the Mellon fortune. The Dow 
Chemical Co. is already utilizing magnesium in a big way. 

Steel however will not be crowded off the map by these 
new minerals all at once. It will be used more in some types 
of products and less in others. The new "shot-welding 
process" has made it possible to construct box girder sections 
of stainless steel which, weight for weight, are 50% stronger 
than similar sections made of duralumin. 


The following table shows the relative importance of dif- 
ferent industries as consumers of steel. In interpreting the 
table, it should be remembered that 1923 and 1929 were years 
of good business, 1922 was a year of relative depression, and 
1931 and 1932 were years of crisis. Thus the increase be- 
tween 1929 and 1932 in the proportion of steel going to food 
containers, though partly a genuine increase, was due chiefly 
to the fact that sales of food in the crisis declined less than 
sales in other lines of business. The most striking thing 
shown by the table is the growth in the importance of motor 
transport as compared with rail transport. 

(Iron Age estimates; see first number of each year.) 

Percentages of estimated total in 
Consumed by 1922 1923 1929 1931 1932 

Railroads 22 27 17 13.5 12 

Building and construction 15 15.5 16.5 18.5 16 

Automobile industry 10 n 18 16 17 

Oil, gas, water and mining 10 10.5 10.5 II 8.5 

Export trade 7 6 5.5 4 3 

Food containers 4 3.5 5 9 11.5 

Agriculture 4 4 5.5 4.5 3.5 

Machinery g 7 3 33 3 

All other j 19.5 19 20.5 25.5* 

Total 100.0 loo.o 100.0 100.0 100.0 

* Includes shipbuilding i%, highways 4%. 

Foreign Markets for American Steel 

The apparent decrease in the proportion of steel going to 
the export trade is due to the fact that less and less steel is 
exported in the raw and semi-finished state. About 10% of 
the American production of iron and steel has found its way 
into the export trade, directly and indirectly, in each year 
since 1923. But the failure of steel exports to increase, in 
the face of a growing world demand for steel, is very striking 
and may be traced directly to certain policies followed by the 
capitalist nations of the world, policies which the steel inter- 


ests of the several countries have helped to shape. Competi- 
tion between the steel producers of the several countries has 
been intensified since the war. 

In the international trade as in the American domestic 
trade, overdevelopment has stimulated competition. World 
capacity for the production of steel ingots exceeded world 
production in 1927 by nearly 18%, according to an estimate 
by the British Parliamentary Committee on Industry and 
Trade. This overcapacity was even more marked in certain 
foreign countries than in the United States. Furthermore, 
the chief foreign steel-producing countries are more depend- 
ent on their foreign markets than is the United States. It 
was estimated in 1928 by the U. S. Department of Commerce 
that France must export between 40 and 60% of her output 
in order to utilize her capacity effectively and economically, 
Germany and Great Britain from 20 to 35%, and Belgium 
and Luxemburg from 60 to 75%. 

The rest of the world depends less and less on the export 
trade for its requirements of iron and steel. These five coun- 
tries and the United States, taken together, had increased 
their exports of steel by 1930 but 7% as compared with 1913, 
though world production of steel had increased in the same 
period by 44%.* 

Making Steel and Making Wars 

The great monopolistic and semi-monopolistic enterprises 
which struggle for economic advantage in undeveloped sec- 
tions of the world are associated with particular national 
governments whose military forces are used to further the 
advantage of their nationals. It is assumed that the United 
States government, for example, will seek to extend abroad 
the markets and the raw material supplies not only of the 
American steel companies but of all other American com- 
panies whatever. 

In each country certain big banking and steel concerns 


have stood very close to the government, which has worked 
quite frankly for their interests. In France this tie-up has 
been openly admitted. "You can see from the statistics," 
said M. Pichon, French Minister of Foreign Affairs, in 
1911, "that we have obtained valuable results . . . especially 
for our great metallurgical industries." 5 The Minister no 
doubt had in mind the firm of Schneider-Creusot, which is 
to-day (1933) as close to the government as ever. It has 
directed the government's policy on foreign loans in the 
French market, and in 1932, it is charged, the French gov- 
ernment made a secret loan to Hungary, diplomatic enemy 
of France, for no other purpose than to help the Schneider 
interests. 6 The Schneider firm now operates internationally, 
since it has purchased the great Czechoslovak munition works 
at Skoda. 

The steel companies know how to stir up national feeling 
when it is to their interest to do so; but they also know 
how to disregard national boundaries for the sake of greater 
profits. They fill armament orders impartially for their own 
government or for any other. 

In the United States, the leading armament firm is the 
Bethlehem Steel Corporation, which has been in the arma- 
ment business since 1885. This firm has maintained close 
relations with the Navy Department ever since W. H. Jaques 
of that department conducted negotiations to put Bethlehem 
into the armorplate business. Jaques afterward joined Beth- 
lehem. It has happened that navy officers were on the pay- 
roll of armor and steel companies at the same time that they 
remained in the government service. 7 

Among the organizations working for a big navy in the 
United States none has been more active than the Navy 
League. This organization was formed in 1903 on the model 
of similar organizations which had been active for some 
years previously in England and Germany. At that time 
and for 15 years afterward the only three manufacturers of 


armorplate in the country were the Midvale Steel Co., the 
Bethlehem Steel Co., and a subsidiary of the U. S. Steel 
Corp., the Carnegie Steel Co. The 19 founders of the Navy 
League included the Midvale Steel Co., Charles M. Schwab 
of Bethlehem, J. P. Morgan, ruler of the U. S. Steel Corp., 
and Harry Payne Whitney, then a director of the Eastern 
Steel Co. Officials of other steel companies afterwards be- 
came officers of the League, and still other steel men, in- 
cluding Elbert H. Gary, executive head of the U. S. Steel 
Corp., were regular contributors to its propaganda work. 
Yet the secretary of the League had the effrontery to write 
to members of Congress in 1914 that if they thought the 
Navy League was supported by people who were interested 
in the sale of war materials to the navy, they were mis- 
taken? Clyde H. Tavenner, U. S. Congressman from Illi- 
nois, stated in a speech in the House on December 15, 1915 : 8 

The Navy League upon close examination would appear to be 
little more than a branch office of the house of J. P. Morgan & 
Co. and a general sales promotion bureau for the various armor 
and munition makers and the steel, copper, and zinc interests. 

The steel magnates have since resigned their directorships 
in the Navy League, which no longer publishes lists of its 
contributors. But the steel barons have not relaxed any of 
their interest in war orders. Bethlehem Steel was one of 
three companies which made up a $25,000 pool to send the 
lobbyist William B. Shearer to the "disarmament" conference 
at Geneva in 1927; and Shearer's employers were so well 
pleased with his services at this time that they kept him on 
their payroll for a couple of years longer, lobbying at Wash- 
ington.* The steel shipbuilders did not necessarily believe 

* Later Shearer quarreled with the men who had employed him and 
gave the whole game away. See "Alleged Activities at the Geneva 
Conference," Hearings before a sub-committee of the Committee on 
Naval Affairs, United States Senate, 7ist Congress, First Session 


Stainless steels are formed in electric furnaces. Photo shows the tapping 
or pouring process when the furnace is tipped. 


Shearer when he claimed to have wrecked the Geneva con- 
ference; they knew that real disarmament was not and 
could not be the policy of capitalist governments. But they 
knew that the bigger the navy the more the orders. The 
shipbuilding industry was asked to contribute, and probably 
did contribute heavily, to the election of Franklin D. Roose- 
velt, who had long been known as a "big navy" man and who 
on assuming office promptly started building warships in a 
fierce naval race with Japan and Great Britain. Early in 
[August, 1933, Bethlehem was awarded contracts for the 
construction of one heavy cruiser and four destroyers, at 
a total cost of $27,304,000. Federal Shipbuilding & Dry 
Dock Co., subsidiary of U. S. Steel, got a contract to build 
two destroyers with a cost of $6,821,600. 

The steel financiers derive super-profits from the war sys- 
tem, and are perfectly aware of the financial advantage which 
wars and rumors of wars bring to them. But nationalization 
of all munition and armament firms by all capitalist nations 
would not stop wars. Indeed, the deliberate fomentation of 
wars by private war-material firms is only a minor cause of 
the wars that arise under capitalism. Antagonisms between 
competing interests in different countries get bigger as the 
interests get bigger; these antagonisms cause "diplomatic 
tension" and tend ultimately to cause wars between capitalist 
nations, and would do so even if there were no private profit 
in the munitions industry. 9 

The Tariff 

Like the military arm of the government, the protective 
tariff has become in recent years a weapon of the controlling 
business and financial interests for use in the foreign field. 
Throwing aside the argument that the tariff should be used 
to protect "infant industries," they have used it boldly to 
keep up prices at home at the same time that they sold abroad 
at sacrifice prices in an effort to capture new markets. 


The purpose of the tariff has obviously not been to protect 
American labor. The Republicans won the election of 1890 
largely on the plea of protecting American workers against 
"European pauper labor/' Then in 1892, the protected steel 
industry cut wages at Homestead, and caused the famous 
strike. (See Chapter X.) 

When the U. S. Steel Corporation was formed in 1901, it 
controlled such a large proportion of the supply of pig iron 
that by cutting down production in its own furnaces and 
buying over a period of years some 20,000,000 tons of pig 
iron, it was able to set a price for pig iron which was higher 
than the foreign price by nearly the full amount of the tariff. 
This artificial "bulling" of the price of pig iron lasted for 
about ii years, and brought big profits to the company and 
all other steel companies, since the price of steel and of steel 
products was determined as a differential above the price of 
pig iron. 

From the proceeds of these profits, U. S. Steel was able 
to carry on a campaign of selling its products abroad at less 
than the domestic price. This practice, which is called dump- 
ing, has been carried out on a bigger scale by U. S. Steel than 
by any other American company in any industry. 10 At one 
time U. S. Steel sold steel in South Wales so cheaply that 
Welsh tinplate makers were enabled to buy it, finish it, and 
sell the finished product in competition with the corporation's 
own tinplate. 11 As late as October 27, 1932, George E. Dix, 
American representative of the Vereinigte Stahlwerke, lead- 
ing German concern, presented evidence to the Bureau of 
Customs that American steel companies were still selling their 
products more cheaply abroad than at home. 

Since the war, and especially since the beginning of the 
crisis, American iron and steel products have been shut out 
of one country after another by means of protective tariffs. 
Some of these tariffs were aimed specifically at American 


Among the foreign countries which increased their tariffs 
on iron and steel products generally between 1913 and 1926 
were Spain, India, Australia, Rumania, and (in comparison 
with the pre-war rates in force in its constituent parts) Jugo- 
slavia. The government of India has for many years subsi- 
dized the domestic production of steel. 

!A number of countries have recently imposed special duties 
as an emergency measure. On April 4, 1930, the importation 
into Australia of finished products of iron and steel was pro- 
hibited. China's 1930 tariff laws imposed on many if not 
most iron and steel products the maximum duty allowed by 

Effective April 25, 1932, England placed duties of 20 to 
33 T ~3% on i ron an d steel and their products (excepting pig 
iron, on which no new duty was imposed). The following 
July, Canadian purchasers of American steel took steps to 
transfer their purchases to England. Canada has been the 
most important foreign market for American iron and steel. 
Thus the crisis has had the effect of cooping nations up still 
tighter within their respective compartments, increasing na- 
tional isolation and cutting down foreign trade. 

The governments of the capitalist nations have at the same 
time fostered unification of their domestic iron and steel 
industries. They have laid the groundwork for economic 
warfare on a tremendous scale. Serious proposals have re- 
cently been advanced in Canada by which the iron and steel 
manufacturing properties of that country would be amalga- 
mated into a single unit and operated under public control. 
A similar proposal was recently acted on in Japan, and the 
Iron and Steel Trades Confederation of Great Britain, lead- 
ing iron and steel union, has sponsored a resolution, adopted 
by the Trades Union Congress in 1931, which calls for 
bringing the industry in England under the control of a pub- 
lic utility corporation. A national committee of the industry 
recommended early in 1933 a plan which would set up an 


Iron and Steel Corporation of Great Britain to coordinate a 
dozen or so associations each dealing with a group of prod- 
ucts. The purpose of all these proposals is to reduce or 
eliminate competition among domestic producers, to concen- 
trate production in the best plants, and to increase the coun- 
try's ability to compete in foreign markets. The central 
government of Germany in 1932 obtained a controlling inter- 
est in the United Steel Works ( Vereinigte Stahlwerke) , which 
controls directly over 40% of the crude and finished steel 
industry and dominates a much larger proportion through 
indirect participation. The purpose of the step, as reported in 
the press, was to prevent the properties, which had been 
pledged as security for foreign loans, from passing into the 
hands of French and Dutch financiers. 

The European iron and steel industries are caught in the 
same scissors grip as the American industry. Less rapid 
growth of domestic demand is in immediate prospect for all 
fhe European countries to the west of the Soviet Union. The 
more excess capacity emerges and the higher tariff barriers 
are raised, the more will the steel exporters of these countries 
try to force their products into the few remaining open mar- 
kets. The territory left for American expansion will be 
small indeed. 

The immediate prospect for steel is thus not a decline in 
production (in the crisis production sank below the levels 
required for replacement) but a decline in the rate of in- 
crease of production, as compared with pre-crisis conditions. 
With the natural improvements in technique which are to be 
expected, there will be fewer jobs in steel. Capitalist Amer- 
ica makes little provision for finding jobs elsewhere for steel 
workers, who are simply thrown out to join the jobless 
masses dropped by other industries. 


Shifting Locations and Vanishing Jobs 

There remains one phase of the problem of joblessness 
which is usually overlooked the problem of what happens 
to the steel worker when his plant shuts down permanently. 
It may be that another plant is opening up about the same 
time in a more favored location. Does the worker thrown 
out of the old plant find a job in the new one? 

Some, especially among the skilled workers whose skill is 
still in demand, will no doubt be able to make the shift. But 
the majority of the workers in a steel plant fill jobs that 
require no training at all, or next to none. A new mill 
nearly always hires a considerable proportion of workers 
from its new neighborhood, and these newcomers to the 
industry in effect replace the workers discharged or put on 
part time at about the same time from some older mill in a 
less favored location. Thus unemployment and under-em- 
ployment of steel workers undoubtedly increased between 
1919 and 1929, though the total number of workers in the 
industry was a little greater at the later date. 

The following table shows how the jobs have shifted, in 
the short space of ten years. Pennsylvania, which in 1919 
had nearly 45% of the jobs, had less than 37% in 1929, while 
the share of Michigan had more than doubled over the same 
period. All the lake districts increased their relative share, 
including the Indiana section of the Calumet district. (In- 
diana is not shown in the table.) Ohio increased on the 
whole, though the Youngstown district showed a tendency to 
lag, especially toward the end of the decade. 

In locating his plant, the manufacturer in the heavy indus- 
try considers two things mainly the cost of shipping the 
product to the market, and the cost of assembling the raw 
materials. Like textile and other employers, the steel boss 
also desires to be able to pay low wages and to drive his 
workers. But steel is different from textiles in that labor 


cost is a comparatively small proportion of the total cost of 
the product. Wages paid to blast furnace workers amount 
to not more than 6 or 7% of the value of pig iron at the 
plant, and the wages paid to open-hearth workers are an 
even smaller proportion of the total cost of a ton of open- 
hearth steel perhaps 4%. 



MILLS, BY STATES, 1919 AND 1929 

(Compiled from U. S. Census of Manufactures, 1929.) 

Per cent of total jobs 
State 1919 1929 

Alabama 3.2 2.8 

Illinois 5.3 7.9 

Michigan 0.6 1.3 

New York 4.8 4.7 

Ohio 19.9 22.6 

Pennsylvania 44.7 36.7 

Other 21.5 24.0 

Total U. S loo.o 100.0 

The manufacturers of some finished rolled products do, it 
is true, still use considerable crews of skilled workers, and 
their labor cost per ton of product is higher. Certain com- 
panies making sheets for example have in the past shifted 
their location slightly in order to get away from the union 
and pay lower wages. When the American Steel Roofing 
Co. of Cincinnati, reorganizing as the American Rolling Mill 
Co., opened its new plant in Middletown in 1900, the main 
reason for the move was the manager's desire to get into 
farm country. The farm boys, they thought, "could be 
trained to believe in and carry out the ideals of the com- 
pany." 12 Later the company developed the continuous sheet 
and strip mill and fired a large proportion of the skilled 
workers who remained in its employ. 


Changes in location may be forced by changes in markets, 
by changes in the sources of raw materials, by changes in 
transportation facilities affecting the cost of assembling raw 
materials, by changes in the source of power, and by changes 
in related industries. Perhaps the most important of these 
factors in the long run is the factor of markets for iron and 
steel. Markets at one time even forced a change in the fuel, 
from charcoal to anthracite. The rolling mills and to a lesser 
extent the blast furnaces and steel mills have a tendency to 
locate near the big markets, as the history of the industry 

The heavy industry located at Pittsburgh originally because 
Pittsburgh was a natural trade center and furnished a big 
market for rolled products. 13 Later, when Connellsville coke 
and Lake ore replaced charcoal and local ore, Pittsburgh de- 
veloped greatly because it was favorably located for the 
assembly of raw materials. It was a Pittsburgh firm, the Car- 
negie Steel Co., which formed the core of the United States 
Steel Corp., organized in 1901. 

Since 1901, there has been a great development of the 
industry on the Great Lakes first of all at Chicago, the larg- 
est midwestern market, and more recently, with the growth 
of the Michigan automobile industry, at Detroit. Cleveland 
and Buffalo have remained important centers. The Pittsburgh 
district has declined in relative importance, and the neigh- 
boring Youngstown district (Mahoning and Shenango Val- 
leys), having no special advantages and a disadvantage in 
assembly cost as compared with Pittsburgh, has entered a 
decline which may eliminate it altogether. The Colorado and 
Birmingham heavy industries draw on local supplies of raw 
materials and supply mainly local markets. Neither of these 
districts is invading the markets of the older centers. The 
old plants of the eastern seaboard which originally used char- 
coal and local ore, now use midwestern coal and have sup- 
plemented their local ores with imports from abroad. 


Although the bulk of the steel workers are now congre- 
gated in relatively few states, there are good reasons for 
thinking that this concentration of production will become 
less in the near future. Steel shares with other industries the 
tendency toward decentralization. 14 

Markets are shifting and are becoming, on the whole, more 
decentralized. Railroads were formerly by far the most im- 
portant consumers of steel. They could pick up the product 
at the point of cheapest production, and this fact made for 
concentration. But railroad orders are now confined largely 
to replacements. Some think that the auto industry, which 
has recently been the most important consumer of steel (85% 
of the autos now come from Michigan), will spread out. 
Henry Ford has repeatedly announced his intention to build 
small plants in farm country. 

In the cost of assembling raw materials, there is no longer 
as much advantage for the leading districts as there used to 
be. In the first place, the development of the by-product 
coke industry has made it unnecessary for the mills to locate 
near mines producing coal of good quality. An iron and steel 
plant using by-product coke may be erected anywhere within 
a 300-400 mile radius of any coal mine of fair quality. The 
steel industry of the St. Louis district, centering in Granite 
City, 111., now uses largely Illinois coal, which formerly was 
not considered suitable for coking. In the second place, the 
better grades of ore in the Lakes region the chief source of 
supply are being exhausted, and as the quality declines, the 
probability that the ore will be smelted near the mines in- 
creases. Some foresee the growth of a great blast-furnace 
industry at Duluth, where an important plant is already lo- 
cated. Foreign sources of ore (Cuba, Chile, Newfoundland 
and Brazil) are likely to become more important in the fu- 
ture, to the great advantage of seaports and, later, lake ports. 
This shift will create the possibility of a whole series of 
plants at the big ports, wherever fuel can be cheaply sup- 


plied. Iron and steel scrap is becoming increasingly important 
as a raw material for steel. The locations which consume 
steel are the locations which supply scrap, so that decentrali- 
zation of markets will mean decentralization of the supply of 
this raw material. 

A large proportion of the steel is transported by rail. The 
rise in freight rates since 1900 relatively to the price of steel 
has tended to shift the industry nearer to markets. Power is 
now obtained largely from electricity, which can be trans- 
mitted longer and longer distances. The growth of giant 
power will tend to decentralize all industry, but perhaps 
especially iron and steel, where the use of electricity may 
increase very greatly in future. 

Changes in related industries affect iron and steel. In at 
least three instances (in the eastern seaboard area) the loca- 
tion of pig-iron production has been determined by the mar- 
ket for coal-tar dyes and other products reclaimed in the new 
"by-product" coke oven. So profitable have these "by- 
products" proved that ovens have been built for the special 
purpose of producing them. Then blast furnaces have been 
erected to use up the coke. What may be the importance of 
the growth of alloys, most of which depend on foreign sources 
of supply for the alloy metals, is difficult to forecast. 

Decentralization will be tremendously furthered if the new 
centrifugal casting process has the development which is 
predicted for it. One reason why the industry has been con- 
centrated at relatively few points is that the integrated plant 
has required tremendous production for the most efficient 
operation. Two stages especially have called for mass pro- 
duction: the blast furnace and the blooming mill. Modern 
blast furnaces have outputs up to 45,000 tons a month; and 
blooming mills are usually built to roll 35,000 to 60,000 tons 
a month. To keep these furnaces and blooming mills operat- 
ing at capacity a large complement of steel mills and finishing 
mills are essential. The centrifugal casting process, operating 


in connection with an electric furnace, can dispense with 
blast furnaces, soaking pits, and blooming mills altogether. 
An all-scrap mixture can be used in the melting furnace, and 
the circular ingot, cast by the centrifugal process, can be 
taken direct to a billet mill, which can be operated efficiently 
on a far smaller tonnage than the old blooming mill, Thus 
it becomes possible to take the steel plant to the point of 
steel consumption, where, naturally, large quantities of raw 
material in the form of scrap continuously accumulate. The 
first centrifugal-casting plant is being constructed in Detroit. 
The second will be, according to plan, in New England, which 
has heretofore shipped the large quantities of scrap it pro- 
duces as far as Pittsburgh and Philadelphia for re-melting. 15 

The hope of profits has guided the men who have had 
charge of developing the steel industry. We shall see in a 
later chapter how richly this hope has been realized. Here we 
merely note that profits have been the main consideration 
governing company policy not only on points of engineering 
but on disease prevention, wages, hours, layoffs, and condi- 
tions in the plants. 

When the steel lords are challenged concerning these con- 
ditions, they usually try to justify themselves by pointing to 
their "welfare" activities. Myron C. Taylor, chief executive 
officer of the United States Steel Corporation, before a Senate 
committee in 1933 admitted that his firm had cut wages 23% 
in two years ; but, he added, the firm had spent in only one 
year no less than $16,000,000 on welfare. Since welfare is 
only one phase of what is usually called the "labor policy" 
of the corporations, we purpose in the next chapter to analyze 
in detail this labor policy, bringing out the disadvantages to 
the workers as well as the alleged advantages which the com- 
panies' program has involved. 


THE steel employers continuously exert pressure to force 
their employees into greater and greater servitude. A glance 
into history shows that there is no length to which steel em- 
ployers will not go in this direction. 

Colored slave labor manned the furnaces and forges of 
the South from colonial times to the Civil War. Indentured 
white labor was also widely used during the colonial period 
and at least some of this group of workers were doing forced 
labor in a very real sense. The famous iron works at Saugus, 
Mass., had in the I7th century about 40 unskilled laborers 
who had been taken prisoners in Scotland by Oliver Crom- 
well's army and sent to the works under ten years' indenture 
to the company. 1 Coming to more recent times, we find the 
steel employers in Alabama using convict labor under lease as 
late as 1911 in their coal mines. 

With the decline of unionism since 1892 and the growth 
of the power of the great steel companies, steel workers have 
slipped back to a sort of semi-free existence. 2 The officials 
of the United States Steel Corporation have more arbitrary 
power over the lives of more families than do the rulers of 
some independent nations. The powers exercised by the 
modern steel barons, and particularly by the heads of the 
biggest company, U. S. Steel, are comparable to those exer- 
cised by a sovereign ruler, and are greater in some respects 
than those once exercised by the feudal lord; for the lord's 
vassals were at least protected by the binding force of custom, 
while the orders of the steel companies jump over customary 
limitations. The purpose of this chapter is to examine in 



detail some of the methods by which the steel companies have 
assured their control over the conditions of the labor contract. 

Steel mills require much land, and they are seldom built in 
the middle of an already existing city. Rather the mill is 
located outside urban areas, sometimes far from any impor- 
tant center of population. Steel workers come to live near 
the mill ; they form a town. In this town the steel company 
commonly exercises in fact, if not in law, all the functions of 
government. The company dominates education and organ- 
ized religion. It is the state. 

The forces that police the steel communities exercise gov- 
ernmental authority but typically are paid by the companies and 
responsible directly to them. In time of industrial peace, the 
mills and company towns are policed by special deputy sher- 
iffs, usually in uniforms the retainers of the feudal lords of 
steel. In Pennsylvania these guards were formerly members 
of the force known as the "coal and iron police." In 1928 the 
Carnegie Steel Co., one of the several subsidiaries of U. S. 
Steel which operate in Pennsylvania, was employing 475 coal 
and iron policemen, or more than any other company in the 
state; all the subsidiaries of U. S. Steel together must have 
been employing over 700 such police. 3 All commissions were 
revoked in 1931, but the legal basis of the system remains 
unchanged. The United States is the only important indus- 
trial country which permits private payment of officers of 
the law. 

Company Towns 

Let us examine the life of a worker in the town of Ali- 
quippa, formerly Woodlawn, Pa., on the Ohio River some 20 
miles below Pittsburgh. 4 The worker is never allowed to 
forget that the "J. & L." (Jones & Laughlin Steel Corp.) is 
his boss. The J. & L. whistle wakes him up in the morning ; 
he spends his days in the J. & L. plant ; the chances are that 
he lives in a house that was built by the J. & L.-controlled 


land company, and pays his water bills to the same. When 
his savings have been eaten up by the stagger plan, he will 
have to trade at the J. & L. store, which grants him credit. 
No movie will be shown, no teacher will be employed, that 
says anything against the company. 

Even more than in most company towns, the company in 
Aliquippa makes persistent efforts to control the votes of its 
workers, locally, and nationally. At election time, workers' 
party candidates and their active supporters are driven out 
of town ; at one time a number of Communist workers were 
tarred and feathered and deported from the town. A few 
other Communists who remained were spied on by company 
police, who raided one of their informal meetings in 1928; 
and as a result three of them were convicted of sedition and 
sentenced to long terms in prison, where one Milan Resetar 
died. In one election campaign Communist leaflets had to 
be dropped from an airplane. Campaigning even for the 
Democratic Party is believed by workers to have caused some 
men to be discharged from the plant. 

In 1914, ... on the Thursday before election day [reports 
Amos Pinchot], I saw 5,000 men discharged from one steel plant 
in western Pennsylvania, with the admonition, given them by 
the foreman at the gate, that unless Senator Penrose were re- 
turned, the plant would stay closed indefinitely. 5 

On one occasion a small shopkeeper pointed to the fact 
that members of the governing council of Aliquippa were at 
the same time continuing to receive salaries as J. & L. officials, 
in violation of Pennsylvania state law. At the next election 
these men were replaced with others not openly in the com- 
pany's pay but equally satisfactory to it. "The company 
ought to have something to say about the way the town is 
run," said an official of the J. & L. housing subsidiary, de- 
scribing the incident. "The company owns pretty near every- 
thing in sight." 


In the South, U. S. Steel virtually has the power of life and 
death over the Negro residents of its company towns. When 
Matt Lucas, a colored millwright's helper in the Fairfield mill 
of the Tennessee Coal, Iron & Railroad Co. (U. S. Steel 
subsidiary), "got sassy" with a foreman, he was taken out of 
his home the same night and foully murdered, and no men- 
tion of the murder appeared in the press. 6 When the facts 
of this killing were brought to the attention of the high of- 
ficials of the T. C. I. and of the U. S. Steel officials in New 
York, two of the murderers were still in the employ of the 
Alabama concern. The feudal lords of steel did not find the 
mere fact that these men had killed a Negro sufficient reason 
to discharge them. 

Probably the most tightly "closed" company town of any 
size in the Middle West is Weirton, W. Va., which is con- 
trolled by a subsidiary of the National Steel Corp. In Weir- 
ton all workers' organizations are watched for evidences of 
Communism or unionism, and it is reliably reported that 
workers who voted a left-wing ticket in the local branch of 
the Croatian Fraternal Union were fired from the mill shortly 
after. Union organizers take their lives in their hands when 
they visit Weirton. One organizer of the Steel & Metal 
Workers' Industrial Union received word from the chief of 
the company police that a machine gun was ready for him 
any time he was seen in the town. 7 

Against this terror the workers are helpless only because 
they do not choose to assert themselves. Even the most 
blustering and hard-boiled company mayor is helpless to 
prevent a mass rising of the workers. Meetings had been 
prohibited ever since 1910 in McKeesport, Pa. (the "Tube 
City"), and in Duquesne, just across the river, and all union 
organizers had been run out of town except for a short 
period during the steel organization campaign of 1919. Then 
in 1932-33 the workers under the leadership of the Com- 
munist Party and the Steel & Metal Workers' Industrial 


Union broke down the ban on free speech and began holding 
street meetings in defiance of the mayor and police. 

Aliquippa is an incorporated municipality of 27,000 popu- 
lation, but it is no less a company town than the patches 
adjoining the Jones & Laughlin coal mines some miles to the 
south. Indeed, up to 1927, when the company broke off rela- 
tions with the miners' union, there was more freedom of 
thought and expression in the coal patches than in Aliquippa. 
The fact that steel workers are for the most part city dwellers 
does not in itself preserve them from company domination; 
it merely means that the company exercises its control on a 
more grandiose scale. 

The despotism exercised by the steel companies is not a 
"benevolent despotism"; it does not create garden spots for 
the workers and pamper them with luxuries. At Gary, for 
example, a barren stretch of sandy lake shore was trans- 
formed within twenty years into a city of 100,000 population, 
owing entirely to the fact that the U. S. Steel Corp. built 
several mills on the lake front. But Gary typifies the worst 
mistakes of American city planning, or rather lack of plan- 
ning. After some insiders had taken advantage of a "leak" 
in the U. S. Steel Board of Directors to clean up a fortune in 
real estate by buying land options in advance of the company, 
the "development" of the town was turned over to a group 
of capitalists who have run the town for their own profit. 
No provision was made for securing a beach for recreational 
purposes until the people of the growing town set about to 
secure one for themselves. Houses were built cheaply and 
sold expensively, always too slowly for the needs of the ex- 
panding population, so that Gary has been chronically over- 
crowded. Park space has been stuck in according to no 
ascertainable system. In the laborers' residential sections, 
buildings have been crowded onto lots in violation of decent 

* See above, Ch. III. 


Like the coal industry, the steel industry has its "pluck-me"" 
company stores which thrive on the misery and degradation 
of the workers. A welfare worker of the Jones & Laughlin 
Steel Corp. in Pittsburgh blamed So% of the pre-crisis finan- 
cial difficulties of the workers on the company store credit 
system, operating of course concurrently with the stagger 
system. As early as 1929, nearly half of the workers in the 
Pittsburgh plants of the J. & L. had accounts at the company 
store, and their debts to the store were regularly checked off 
their wages. Since the depression, the proportion has vastly 
increased, so that nearly all the workers are being "carried" 
to a greater or less extent at the store, until they get laid off 
entirely. This "carrying" puts the workers more than ever 
in the company's power. The owners of the J. & L. operate 
seven "company" stores. It prefers to have the workers tied 
to the company. Other companies follow a similar policy. 

Investigation of store prices in the Birmingham area indi- 
cates that the steel company stores charge more than the same 
type of stores run independent of the company, the difference 
being much greater on some classes of goods than on others. 
Workers in most centers complain that the company stores 
sell above the market price. The Union Supply Co., a sub- 
sidiary of the Carnegie Steel Co., started operating a chain 
of stores, mainly in the coke region, in 1898. The capital 
put into the business was $75,000. By 1910, without any 
new capital having been invested, the Union Supply Co. had 
paid dividends of $4,709,067, and had on hand cash and 
tangible assets amounting to $i,4OO,ooo. 8 

Workers in the South who must have advances before pay- 
day on accumulated wages must pay a discount of anything 
up to $0% in order to get cash. Employees of the T. C. I. 
get advances in the form of company checks, redeemable only 
in goods at the company store. The worker who needs cash 
must discount these checks with somebody else, who charges 


what he can get for the favor, or the worker may buy goods 
at the store and resell them at a loss. 

The Lukens Steel Co. of Coatesville, Pa., has used the 
workers' own money to assure the company's control over 
the workers' lives. It took the initiative in founding a "coop- 
erative" store in which the workers were invited to buy stock. 
But the control of the store has remained in the hands of the 
company officials. It sells to outsiders and grants credit to 
outsiders but has never paid any dividends. In the depres- 
sion, nearly all the workers have been driven to run up 
accounts at the store, and the company knows, or may ascer- 
tain, the private finances of every one. 

Some companies encourage their skilled workers to enter 
into financial relations with the company by lending them 
money on first mortgage to build homes. As early as 1892, 
the Carnegie Steel Co. had loaned $42,796 to its workers 
in Homestead alone. 9 The company's loan, secured by the 
house, is as safe as money invested in the steel mill. The 
company did not hesitate to use this lever to force workers 
to scab on the steel strike of 1919. Since 1920, 6,284 steel 
workers have borrowed from the U. S. Steel Corporation 
money with which to build houses, and 3,748 owed the com- 
pany money on this account at the close of 1932. 

All the steel companies that have company stores or com- 
pany houses make the payment of debts incurred by the 
workers to the company a first charge on the payroll. Often 
workers have no money left after their rent is deducted, and 
come back on the local charity to be fed. 

The company town in the iron and steel industry is nothing 
new ; as far back as the i6th century the British ironmaster 
Ambrose Crowley had a well-advertised company town in 
County Durham, where he controlled education, medical serv- 
ices, and even poor relief. Neither is it unprecedented for 
steel companies to describe the public services of the com- 
pany towns as "welfare." The Cambria Iron Co. of Johns- 


town, Pa., which was notorious for the low wages it paid, 
secured favorable write-ups in the magazines of the eight een- 
eighties and later because it sponsored various social activi- 
ties (mostly paid for by the workers, through special 
deductions from their wages). But no company has ever 
quite equaled U. S. Steel in the blatancy of its advertising 
concerning "welfare," especially in the South. 

The number of items which U. S. Steel lists under "wel- 
fare" is really imposing. "Safety" work is the pivot around 
which much of the so-called welfare turns. Included as 
"welfare" are accident prevention, relief for injured men and 
for families of men killed (do these payments, one wonders, 
include those legally compelled under the workmen's com- 
pensation laws?), employees' stock subscription plan, some 
pension payments, sanitation (again : what proportion of the 
sums expended under this head were compelled by rising 
public standards of sanitation and disease prevention?), play- 
grounds, schools, clubs, gardens, visiting nurses, etc. The 
installation of urinals and clothes lockers is listed under the 
head of "welfare"; the investment which the company has 
made in dwelling houses rented to employees is likewise so 
classified. Piped systems for drinking water are part of wel- 
fare, as are the salaries of the full-time safety inspectors. 
"Wells and springs protected against pollution" and "water 
closet bowls" are also included. If typhoid fever or malaria 
occurs in a steel town, that is "normal" ; if the disease danger 
is removed, the company has undertaken "welfare work." 
Thus, in one of the bulletins put out by the company is a 
picture with a caption as follows : "Drainage of swamps for 
mosquito control in Alabama. Through this work malaria 
fever cases have been reduced from a normal 6,000 cases an- 
nually to approximately 200 cases." (Emphasis not in origi- 
nal.) One item, and one only, which might be included, is 
missing from the published list of "welfare" activities: the 


cost of the spy system, which as a matter of fact, is probably 
also charged to "welfare." 

In building "model" company towns, the companies have 
one leading motive, namely to cut down labor turnover while 
at the same time continuing to pay low wages. 

Up to about 1905, the bad conditions of working and living 
made production very difficult in the Birmingham area. The 
workers gave the steel industry there a wide berth, or moved 
on after a short trial. An attempt was made to import 
foreign-born workers ; but these soon left for the North. 

The companies used convict labor as long as they could. 
Through a misunderstanding, the Tennessee Coal, Iron and 
Railroad Co. (subsidiary of U. S. Steel) did not get its quota 
of convicts on lease in 1911. Pres. George Gordon Crawford 
of the T. C. I. protested vigorously to the chairman of the 
State Board of Convict Inspectors, on the ground that if the 
company could not use convicts it would have to build decent 
houses for free labor. The leasing of convicts was abolished 
soon afterward in Alabama. This system had never met 
more than a part of the steel companies' demand for "cheap 
and contented" labor. 

The program of building nice houses, schools, and hos- 
pitals which received a big impetus from the abolition of con- 
vict leasing, had really begun about 1906, when John A. 
Topping, who was then president of the Tennessee Coal & 
Iron Co., said, 

The main thing we are driving for in the South is to get good 
men. . . . Living conditions at our mines and plants must be 
improved, and new tenements and schools built. 

A deliberate policy of flattering the Negro workers was insti- 
tuted. Negro schools were built from the same plans as the 
white schools, and Negroes were admitted to the pretentious 
base hospital at Fair field (on payment of the usual fee, and 
of course strictly on a Jim-Crow basis). The company 


achieved its aim. It cut down turnover, and wages of laborers 
in the Alabama steel industry remained at a level of about 
60% of that of the steel industry in Chicago and Pittsburgh 
until July 31, 1933, when a change in the differential brought 
the common labor rate in the South up to 75% of the Pitts- 
burgh-Chicago rate. 

Company Unions 

As pioneers used to fight prairie fires with little back-fires 
of their own creation, so the steel companies have set up their 
own "company" unions to prevent their plants from being 
overwhelmed by the onrush of genuine militant unionism. 
Under the company union or, as the bosses call it, the "em- 
ployee representation" plan, a shop committee or works coun- 
cil, elected usually by the workers in a given plant, meets 
with representatives of the management for discussion of 
recreation, safety and efficiency, and for adjustment of minor 
grievances ; and the management follows a policy of granting 
just enough of the requests that are made by these workers' 
"representatives" so that the workers, or some of them, will 
feel they are gaining something from the scheme. A division 
in the ranks of the workers is thereby created. The workers* 
"representatives" dispose of no funds, have no connections 
with workers outside the plant, and have in general only as 
much power as the bosses choose to give them. 

The company union movement in the United States really 
got under way when the Rockefeller interests, acting under 
the advice of the Canadian politician W. L. Mackenzie King, 
started a company union in the coal mines of the Colorado 
Fuel & Iron Co. in 1915, and extended the idea the following 
year to the same company's Minnequa Steel Works at Pueblo. 
The campaign to organize the steel workers which was 
launched late in 1918 and culminated in a national strike in 
the fall of 1919, called forth a new crop of company unions 
in steel, and a few more were started in the years that fol- 


lowed. It was recently estimated that nearly 100,000 steel 
workers were under such schemes. 10 

The original Rockefeller company union was introduced at 
the close of a mine strike and was intended to forestall further 
unionization moves. The steel workers realized the purpose 
of the plan, and when the steel organization campaign of 
1918-19 reached its climax, they formed their own commit- 
tee, presented demands to the management independently of 
the company union, and when they were refused went on 

The company unions which were introduced in 1918-19 by 
the Bethelehem Steel Corporation, Youngstown Sheet & Tube 
Co., Cambria Steel Co. (later absorbed by Bethlehem) and 
International Harvester Co. (in its Wisconsin Steel Co.) 
were also intended to forestall unionization. The companies 
took pains to control the elections to the committees, and see 
that only "safe" men were chosen. 11 

Their success was uneven. The committee in charge of 
organizing the steel workers exposed the company union 
movement at a national delegate conference of the rank and 
file of the 24 unions involved in the campaign, and advised 
the delegates to capture or fight the company unions. In 
Johnstown a ceaseless campaign was carried on by the or- 
ganizers from the national committee, exposing the company 
union and its failure to fight for the workers' demands. Real 
unionism won a 100% victory. At South Bethlehem, Pa., 
the national committee captured the company union. It was 
experiences like these that made the executives of U. S. Steel 
and Jones & Laughlin decide to keep out of the company 
union movement for the time being. 

Some other company unions did not fall so easily under 
the sway of the national committee and its representatives. 
At the Wisconsin Steel Co. plant in South Chicago, the com- 
pany union was introduced in March, 1919. A number of 
former union men were chosen as representatives in the first 


election. The very first business presented to the "works 
council" (company union) was a motion by Representative 
Studnik to introduce the 8-hour-day for 1 1 hours' pay. The 
council went into executive session, the motion was with- 
drawn, and Studnik resigned. As the steel workers' national 
organization campaign gained momentum, the council pre- 
sented demands on the management, and when certain con- 
cessions were actually obtained (the president of the company 
came personally to the plant and granted the maintenance 
men the actual 8-hour day with a small increase in wages 
just before the strike) the council got some credit in the 
eyes of the workers. Two former officials of the Amalga- 
mated Association of Iron, Steel & Tin Workers were on the 
council, and acted as a brake on the enthusiasm of the more 
militant members. 12 The strike affected the Wisconsin Steel 
Co., but only after an interval of several days ; and the ranks 
of the strikers broke earlier at this plant than at some others. 
During the rush back to work, the council, then completely 
under the dominance of the management, met daily and 
passed on the applications for reemployment. It weeded out 
the active union leaders. A similar task was performed by 
the company union at the plants of the Youngstown Sheet & 
Tube Co. The constitution of this "union" provides, "No 
official of a Labor Union shall be eligible to act as a repre- 
sentative." 1S 

Most of the firms which had company unions during and 
just after the war have continued them, the Lukens Steel Co. 
being the only exception that has come to our attention. But 
it is admitted, even by the management in some cases, that 
the workers show little interest in these puppet unions. This 
lack of interest extends to the Minnequa plant of the Colorado 
Fuel & Iron Co. whose company union is given credit for 
having obtained the actual 8-hour day some four years ahead 
of the general run of steel plants. "Put in to kid us," "Too 
much boss not enough union," "Real complaints can't be 


got across," "No real stuff" these are some of the phrases 
used by Bethlehem workers to describe the company union 
at the Lacka wanna plant of that company. 

Even the managements do not pretend that the company 
unions exercise any real power. The Colorado Fuel & Iron 
Co. plan specifically states that wage rates in the Minnequa 
plant shall be those paid by competing companies, meaning 
U. S. Steel. The Wisconsin Steel Co. council members did 
push for a wage increase early in 1923, but they were em- 
phatically informed that it was "not in the woods," because 
U. S. Steel had not increased wages. The Bethlehem com- 
pany unions do not "dictate" (!) to the management, says 
Charles M. Schwab. 14 

Company unions tend to confuse the workers and may be 
dangerous as a weapon against real unions. 15 Any large- 
scale organization campaign would probably see a revival of 
their use, and unless they were captured or exposed, as in 
1919, their influence might be appreciable.* 


Several of the steel companies undertake to "educate" their 
workers. Not only do they attempt to increase the average 
productive efficiency of the skilled workers by intensive 
courses in foremen training they circulate at considerable 
expense leaflets warning against the dangers of Bolshevism. 
The American Rolling Mill Co. has been especially active in 
both kinds of "education." In order to show its workers that 
"the capitalist system . . . has stood the test of time, and 
. . . can properly reward individual initiative, ability and 
ambition," it caused to be reprinted a lurid and inaccurate 
speech by the professional patriot Fred R. Marvin, entitled 
"Bootlegging Mind Poison," and distributed copies of the 
reprint to all the workers in the organization. 16 

* On company unions under the "New Deal," see below, p. 267 ff. 


Stock Purchase Plans 

An ingenious method of tying the aristocracy of the steel 
workers to the company is the system of stock-purchases, 
introduced by the U. S. Steel Corp. in 1903 and copied since, 
with modifications, by Bethlehem and some of the smaller 
companies. The U. S. Steel plan in its turn grew out of the 
works savings plan of the Carnegie Steel Co., under which 
the workers at the Homestead plant alone had, in 1892, no 
less than $140,000 of their savings on deposit with the com- 
pany and drawing interest. The cost of the stock purchase 
plan is charged to "welfare" by U. S. Steel, indicating that 
the company considers this plan a part of its program of 
influencing and controlling the workers. 

The worker gets regular dividends from the date he starts 
his subscription. In addition, the company announces a 
special bonus each year to employee stock purchasers. This 
bonus amounts (1933) to $2 a year for the first two years 
and $3 for each of the following three years. If the employee 
is continuing his payments regularly, he receives his special 
bonus, in the form of a deduction from payments due under 
the plan. 

Many of the buyers are fired, or quit, or withdraw from 
the plan. All these get their money back with $% interest. 
The company does not pay them the bonus ; instead, it pays a 
corresponding sum into a "jack-pot." At the time the fifth 
bonus is due, the "jack-pot," which has meanwhile been ac- 
cumulating compound interest at $%, is divided in proportion 
to number of shares held, among those who have continued 
their payments and who according to the corporation's "final 
determination in its discretion" are "deserving thereof." 

After the payments are completed, and the bosses' pets 
have received their rewards for "being good," the workers 
may keep or sell the stock at their option. But there are no 
more special bonuses. Therefore many workers sell the stock 


they have just finished acquiring in order to start the purchase 
of new stock. The number of shares of common stock sub- 
scribed for under the plan in the 22 years 1909-1930 inclusive 
was, in round numbers, 1,820,000; yet at the end of 1930 
U. S. Steel employees, including of course the president and 
other officers, held only 803,328 shares of common, and it is 
not stated whether all of these shares were bought through 
the stock purchase plan. It is evident that at least half of 
the shares so bought are presently sold again, even in "pros- 
perity." Since the crisis began, thousands of shares have 
been sold for what they would bring. The workers who have 
completed payment and received full title to their stock can- 
not turn it in to the company and receive again the money 
they laid out for it, as those who are still paying can do. 

The workers have suffered losses, under the stock purchase 
plans of U. S. Steel and other companies, of millions of dol- 
lars since 1929. 

The purpose of the U. S. Steel Corp. plan is obviously to 
give the worker a stake in the company and tie him securely 
to his job to make him "capital-minded" rather than worker- 
minded. Since the unskilled workers cannot be expected to 
buy much stock, the stock purchase plan has an additional 
function : to split the ranks of the workers. Even those who 
are buying stock are set against each other by the provisions 
concerning the "jack-pot." When some stock-purchasers 
drop out, or go on strike, the pot is that much richer for the 
"loyal" workers. 

A company which sells its common stocks to its own work- 
ers is leading the workers into a risky speculation for its own 
ends, even if it limits the number of shares that any one 
worker may purchase, as the steel firms do. It is urging 
them to put all their eggs in one basket. Workers who wish 
to save money, and to invest it so as to support them during 
unemployment, could hardly select a worse type of investment 
than common stock, especially common stock of the company 


they work for. Preferred stocks, such as the Bethlehem 
Steel Corp. sold to its workers from 1923 through 1931, and 
such as U. S. Steel and the Wisconsin Steel Co. (Interna- 
tional Harvester Co. subsidiary) used to sell before they 
switched to common, are a little less risky than common 
stocks. But the Bethlehem stock which was offered to work- 
ers in 1931 at 121 had dropped by April 30, 1932, to a 
market value of 38. 

Other companies which have, or have had, stock purchase 
plans for employees include the Acme Steel Co., American 
Rolling Mill Co., Belmont Iron Works, Jones & Laughlin 
Steel Corp., Wheeling Steel Corp., Youngstown Sheet & 
Tube Co., and three subsidiaries of the Republic Steel Corp. 
It was estimated recently that companies employing 70 to 
So% of the workers in the industry had such plans. 17 

With all of the companies the purpose is the same to split 
the workers, to tie up the skilled workers and to keep them 
"loyal" to the company, which thereby gains in "stability/* 
This desire for "stability" is put foremost by the American 
Rolling Mill Co. in discussing the reasons for its employee 
stock-selling plan. "One of the greatest stabilizers in human 
activities is the practice of personal thrift," says its pamphlet 
Facts for Foremen. 

There is some indication that the bosses may drop their 
employee stock purchase plans. The scheme works nicely as 
long as the general trend of stock prices is upward ; but when 
workers are caught by a drop in the market their ire knows 
no bounds. Even the conservative Industrial Relations Sec- 
tion of Princeton University, which usually hesitates to ex- 
press any opinion on the subjects it studies, has recently 
declared that employers and employees alike have lost more 
than they have gained from the employee stock ownership 
movement. 18 


Pensions 19 

The feudal lords of steel, in their efforts to retain control 
over the conditions of the labor contract, maintain lobbies at 
the state and national legislatures to defeat protective labor 
legislation. When pressure for a given legislative reform 
becomes strong, some companies are apt to make a nominal 
reform within their own little domain. A fine illustration of 
what usually happens is seen in the field of old age pensions, 
legislation for which has been agitated in the United States 
at least since 1900. 

The International Harvester Co. instituted a formal pen- 
sion plan in 1908, which of course affected the workers in 
the Wisconsin Steel Co. plant. The Cleveland-Cliffs Iron 
Co. followed the next year, and U. S. Steel with a great blast 
of trumpets set up its own pension plan in 1911. Since then, 
the following have established formal pension systems: 
Colorado Fuel & Iron Co., 1917; Henry Disston & Sons 
(Philadelphia) and Clyde Iron Works (Duluth), 1920; 
Bethlehem Steel Corp., Jones & Laughlin Steel Corp., and 
Wickwire- Spencer Steel Co., 1923; and West Leechburg 
Steel Co., 1929. The Acme Steel Co., with 1,500 employees, 
instituted a plan in 1919, but discontinued it in 1929. The 
number of companies having plans has thus remained the 
same since 1923. Such important steel firms as the Youngs- 
town Sheet & Tube Co., Republic Steel Corp., National Steel 
Corp., Inland Steel Co., Pittsburgh Steel Co., Gulf States 
Steel Co., etc., etc., have no formal plan and do not con- 
template establishing any. Altogether it is estimated that 
only 43% of the employees of all steel companies are work- 
ing for companies having a formal pension plan. 

These plans provide that when a worker reaches a certain 
age usually 65 he may be retired on pension provided he 
has a specified number of years' service with the company 
to his credit. The service requirement with U. S. Steel is 


25 continuous years. Most of the other companies require 
20 or 25 years' service. The amount of the pension is 
usually i% of the average wage earned during the last ten 
years, multiplied by the number of years of service. This 
method of calculating pensions discriminates in favor of the 
salaried worker and against the wage worker. The salaried 
worker typically reaches the peak of his earning power late 
in life, whereas the skilled wage worker is often physically 
unable to hold a "good" job much past the prime of life, and 
is dropped back to a low-paid job at least ten years before 
he reaches pension age. The method may also be used to cut 
down the amount of the pension paid to workers who in their 
later years have worked irregularly. The Bethlehem Steel Co. 
has calculated pensions on the basis of actual rather than full- 
time earnings a kind of chiseling which is "as cheap and 
contemptible as stealing the pennies from a blind beggar's 
cup/' 20 

Even the worker who has been granted a pension is not 
sure that he will continue to receive it. All of the companies 
announce that they will terminate pensions for "cause" or 
for "gross misconduct." It is understood that misconduct for 
this purpose includes refusal to scab on a strike. Thus an 
incidental advantage to the companies of having their own 
pension plans rather than a state-administered system is that 
they are assured of help in an emergency. Old workers can- 
not be expected to perform all the processes in the mill, but 
they are experienced and can train up scabs. 

What actually happens to steel workers over 65 ? Nearly 
half of them in a period of "prosperity," and a much smaller 
proportion since 1929, go on working for a shorter or longer 
period, either because they have not yet accumulated the 
necessary service requirement, or for some other reason. 
Of those who, in a period of "prosperity," quit work at or 
after the age of 65, some 42% receive pensions, and most of 
the other 58% remain without work and presumably de- 


pendent. 21 Some kind of informal pension is granted by 
nearly every steel company to a very few old workers. Since 
1929, the proportion of old workers who are dependent has 
of course increased greatly. The chances are against the 
young steel worker ever receiving any kind of pension, sup- 
posing the present picture to remain unchanged. 

Most of the steel companies meet their pension payments 
out of current expenses; the West Leechburg Steel Co., 
which employed only 825 in 1930, is the only one to have 
reinsured the pension risk. The U. S. Steel plan is only 
10% funded, and the only other plans which are funded at 
all are those of the Wisconsin Steel Co. and the Jones & 
Laughlin Steel Corp. Myron C. Taylor, financial wizard of 
U. S. Steel, won enormous credit with J. P. Morgan by pay- 
ing off most of the company's funded debt in 1929 when dol- 
lars were cheap, but his wizardry did not lead him to build 
up at the same time a reserve fund for the company's pension 

Any change in the conditions surrounding a plan which 
seems likely to lead to additional expense for the company, is 
usually followed by a worsening of the conditions of the 
plan. About 1925, there became evident a definite lowering 
of the average age at which pensioners were retiring from 
U. S. Steel, and a corresponding increase in the number of 
retirements. There followed in 1927 a change in the plan's 
provisions. Theretofore a worker who was totally incapaci- 
tated could claim a pension if he had 15 years' continuous 
service to his credit. After the change, he had to show 25 
years. The number of retirements for incapacity immedi- 
ately fell by 25%. 

The Colorado Fuel & Iron Co. was the first to give its 
pensioners a "wage cut" in the crisis. All pensions were re- 
duced 10% March I, 1932, and at the same time the mini- 
mum pension payment was reduced from $300 to $144 per 
year. In 1932, when the U. S. Steel Corp. was having diffi" 


culty in continuing payment of dividends on its preferred 
stock, it set its actuaries to work reexamining the pension 
plan, and on May i, 1933, the pension payments were cut by 
amounts varying from 5 to 25%. There is nothing to pre- 
vent any of the companies again excepting the West Leech- 
burg Steel Co., which has a contractural plan from changing 
or abolishing its plan as it pleases; and if the management 
should happen to take a stand for retention of any particu- 
lar plan, any stockholder of the company could probably get 
all pensions, and the plan, abolished by court action. In 
each company there are some superintendents who seem to 
make a point of discharging workers just before they would 
have become eligible for a pension ; and the number of such 
discharges seems to increase in a crisis. 

The primary purpose of pensions in steel is not to protect 
the workers in their old age. It is to tie the workers to the 
company, and to stave off social legislation. 

Meanwhile, what happens to non-receivers of pensions 
the majority of the superannuated steel workers ? A feature 
story in the Pittsburgh Post-Gazette for June 26, 1929, was 
suggestive. It carried a picture of a wretched tumbledown 
shack on the banks of the Monongahela River, occupied by 
three old beach-combers who, when the river was low, climbed 
into the sand to drag out scrap iron and steel, which they 
sold to junk-yards for $7 a ton. (The price, incidentally, 
has since dropped to $4 a ton.) They drank from cans that 
had the lids fashioned into handles. Their beds were hard 
planks, their coverlets old clothing, and this was in the days 
of "prosperity" ! Yet they had all been skilled steel workers 
one a roller, one a patternmaker, and the third an elec- 

For all steel workers, there is only one satisfactory kind 
of pension a steady money pension guaranteed, by the gov- 
ernment on an adequate state or country-wide basis, not the 


skimpy semi-local basis now provided by the few states which 
have pension laws. 

Group Insurance 

The need for real social insurance is becoming more and 
more widely recognized in the United States, especially since 
the establishment by the Soviet Union of a really adequate 
system of social insurance against all the important risks to 
which the wage worker is subject. Private insurance is im- 
possibly expensive for the average steel worker. Life in- 
surance is too dear because of the heavy loading of the 
premiums under private insurance, and because the steel in- 
dustry is so risky that its workers must pay extra premiums. 
Burial insurance the so-called "industrial insurance" is 
even more expensive for the protection received, because of 
the method of collection and because so many holders of 
policies are obliged to drop out along the way. Health in- 
surance is simply out of sight, and steel workers, like other 
wage-earners, usually cannot get through a long illness in 
the family without coming back on private charity. The only 
exceptions are in the few plants which have employees' 
mutual benefit associations financed by deductions from 
wages. So a fairly strong movement grew up in the United 
States just after the war which had for its object the 
passage of state health insurance laws, modeled more or less 
on those which had been in force for 30 years in Germany 
and for a shorter period in England and other countries. This 
movement was defeated all along the line through the efforts 
of the lobbies of the big employers, and the movement lapsed 
for a time after 1920. The bosses had been given a good 
scare, and they began to take out group insurance. 

Some of the steel companies (Jones & Laughlin, Youngs- 
town Sheet & Tube, Superior Steel, Wheeling Steel, Spang- 
Chalfant, Bethlehem, etc.) have group insurance plans 
which provide small payments in case of sickness ; but most 


group insurance plans cover only life insurance, with small 
payments in case of permanent total disability resulting from 
a non-occupational accident. The Republic Steel Corp. group 
insurance plan affects only some of the company's plants, and 
covers perhaps 10% of the total of its employees ; but all of 
the others out of the ten largest steel companies, and very 
many of the small ones, have group insurance plans. 22 The 
exceptions include the Sloss- Sheffield Steel Co., Davison Coke 
& Iron Co., McKeesport Tin Plate Co. and Alan Wood Steel 
Co. Probably 85 to 90% of the employees of steel com- 
panies come under some kind of group insurance plan. A 
common policy is $1,000, and a common premium rate is 
$i a month. 

Ernst and Hartl found in 1929 that a clear majority of all 
steel companies having plans made the workers pay the whole 
cost. The tendency is for group insurance premium pay- 
ments to be shifted more and more onto the workers. The 
Allegheny Steel Co., which formerly paid the whole cost and 
now shares the cost with the workers, is an example. Two 
companies (Keystone Steel & Wire Co. of Peoria, 111., and 
American Rolling Mill Co.) still pay the whole premium, but 
the amount of insurance provided is so little that the workers 
are urged to add to the value of the policy out of their own 

Group insurance is always term insurance that is, it 
covers only a limited term (one year), and does not build 
up a reserve. The plan may be dropped at any time, and 
when it is dropped, the workers have no accumulated funds 
on which to draw. Most of the workers in a plant must come 
in on the plan in order for it to be adopted at all ; the New 
York law, for example, requires 75% coverage. The Jones & 
Laughlin Steel Corp. takes no chances, but signs up its whole 
force. In all companies having group insurance, the plans 
are voluntary in name and compulsory in fact for the gen- 
eral run of the workers. 


The large coverage makes it possible for the insurance 
companies to dispense with the physical examination and still 
make a profit. The group insurance salesman makes a great 
talking point of the fact that a worker leaving the company 
while a group insurance plan is in force may take out a policy 
of his own, straight life insurance, endowment insurance, or 
any other kind of life insurance, without taking a physical 
examination. The insurance experts well know that workers 
do not add to their expenses just at the time they lose their 
jobs, and that the number of workers who take advantage of 
this "privilege" is negligible. 

The premium is usually set high at first so as to be sure 
to cover the cost. As a result there are apt to be dividends 
paid back by the insurance company at the end of the year. 
The steel workers, even those who pay the whole premium 
(through deductions from their wages), never see these divi- 
dends. The Colorado Fuel & Iron Co. workers pay over half 
of the group insurance premium, but the company keeps all 
the dividends, which in the first year of the plan amounted 
to 14.5% of the premium paid in. 23 The Lukens Steel Co. 
workers pay more than 90% of the premium, and the divi- 
dends on the group insurance, which amounted in the first 
year to 25.8% of the premium, go to the company benefit 
society, which uses them to create a pension fund. The presi- 
dent finds that group insurance is good business. 

I am perfectly frank in stating [he wrote to the insurance com- 
pany in 1929] when I first went into the proposition of group 
insurance I was somewhat skeptical as to the benefits which 
would accrue to our company and our employees. However, it 
is a pleasure for me to state that my skepticism has changed to 
strong faith and belief in the efficacy of group insurance. 24 

The steel companies see to it that the insurance companies 
get their premiums, even under the stagger plan. It has been 
common in some localities, perhaps especially the Chicago 


area, for workers to be called on for just enough work each 
month to pay their insurance premium, leaving them with 
little or no cash. The premium payments are checked off the 
wages like charges at the company store, or rent for a com- 
pany house, or any other payment to the company. Such 
payments are always a first charge on wages. So bad did 
the situation become that some companies were finally forced 
to put slight limitations on the practice of checking off in- 
surance premiums. 

Group insurance benefits have been cut in the crisis. 
Workers for the Bethlehem Steel Corp. formerly got from 
$10 to $12 a week in case of sickness, the amount depending 
on the rate of pay. Early in 1933, reports a worker in the 
Sparrows Point plant, a flat cut of $3 a week in the benefit 
payments was announced. At the same time, there was re- 
ported from Gary a move on the part of a U. S. Steel sub- 
sidiary there (the American Sheet and Tin Plate Co.) to have 
the workers turn in their group insurance policies for new 
ones. The new policies would carry the same rate of 
premium, but the clause providing for $1,000 benefit in case 
of permanent total disability would be removed. Some 
workers immediately raised the demand that the company 
should pay for all the insurance. 

A special kind of insurance somewhat resembling group 
insurance is in force in the isolated mining communities of 
the Iron Range in Minnesota. The so-called "Mesaba plan" 
of the Oliver Iron Mining Co. (subsidiary of U. S. Steel) 
has been adopted by most of the iron mining companies of 
that state. This plan provides medical care during disability 
for the worker and for dependent members of his family, 
provided the disability is not due to an accident covered by 
the workmen's compensation law. To support this service, 
every worker has a certain sum in the past usually $1.25 
deducted from his wages each month. 25 

Group insurance is not necessarily opposed by the workers, 


who are strongly in favor of the principle of dividing up 
risks. But the workers readily see the superior advantages 
of real social insurance, which is reserve insurance (not term 
insurance) ; which is administered with workers* representa- 
tion in England, and by the workers themselves in the Soviet 
Union; which does not involve the payment of salesmen's 
commissions and heavily inflated salaries to private execu- 
tives; which covers all the workers in an industry (in the 
Soviet Union, the workers' families as well as all of the 
workers themselves are covered) ; which can be made to pro- 
vide benefits for sickness, invalidity, and unemployment as 
well as for death and total disability; and which is paid for, 
in all countries having such a system, at least partly by the 
employers and the government, and in the Soviet Union 
altogether by the industry, which of course is run by the 
government. Compared with real social insurance, company 
pensions and group insurance are a racket. 

Spy System and Blacklist 

The steel companies' most important weapon for retaining 
control is not "welfare," but the spy system coupled with the 
blacklist. The spy system in steel is probably as old as 
unionism in the industry. The investigators of the Inter- 
church World Movement's commission of inquiry in the 
steel strike of 1919 uncovered an extremely far-reaching spy 
system the existence of which was not denied by the com- 
panies because it could not be. 

But there are still some questions regarding the spy system 
that have not heretofore been answered. Does the system 
operate continuously, or only during a union organization 
campaign? Does it operate on a country-wide scale, or only 
where the unions are active? Do the companies run their 
own spy systems, or do they rely on paid agencies such as 
the Sherman Service (now the Sherman Corporation) and 
the Corporations Auxiliary Co. ? 


These questions have been answered, as far as U. S. Steel 
is concerned, by two sensational investigations, one carried 
out on the Iron Range in Minnesota in 1928 and reported by 
Frank L. Palmer in Spies in Steel: An Expose of Industrial 
War, and the other carried out for the writer by a trained in- 
vestigator in Pittsburgh in the latter half of the year IQ32. 26 
As a result, we are able to state with complete positiveness 
that U. S. Steel's spy system operates continuously, as continu- 
ously as any other part of its "personnel" program ; that the 
plan is country-wide in scope ; and that the company itself hires 
and pays its own spies, and receives their reports. Of course 
the fact that a company has its own regular staff of spies 
does not exclude the possibility that the company may hire 
agency operatives for special work; but this is seldom done 
because it is expensive. 

The head offices of the U. S. Steel spy system are located 
in Pittsburgh, in the Carnegie Building directly under the 
offices of the Carnegie Steel Co., U. S. Steel's most important 
subsidiary. At the head of the spy system of the Carnegie 
Steel Co. is one Charles W. Tuttle, whose office is at Room 
1009. Frank L. Palmer visited him there in July, 1933, and 
found him receiving spy reports as usual. The head of the 
company's spy system in Chicago is W. L. Furbeshaw of the 
Illinois Steel Co., who testified before the Fish Committee 
investigating Communism in the United States. The sub- 
sidiary of U. S. Steel on the Iron Range is the Oliver Iron 
Mining Co., and its vice-president, Pentecost Mitchell, re- 
ceives the spy reports and presumably directs the spy work 
in that area, or did in 1928. These three offices exchange 
reports, and refer matters of unusual importance to the head 
office in New York. 

The head of the spy system in the H. C. Frick Coal & Coke 
Co., another U. S. Steel subsidiary, is one George Ruch, a 
former agent for the United States Department of Justice 
who during the railroad shopmen's strike of 1922 helped get 


the information on the basis of which the then Attorney- 
General Harry Daugherty secured his notorious injunction. 

The U. S. Steel Corporation's spy system is also active in 
the South. Its subsidiary, the Tennessee Coal, Iron & Rail- 
road Co., is the dominant firm in the Birmingham area, where 
T. S. Rawlings, a machinist, was caught spying in 1930, and 
Harry Kites, salesman for the Pennington Auto Co., was 
exposed in 1931. 

In Mr. Turtle's 5-room office is maintained one of the best 
current libraries on labor and radical activities in the country. 
About 90% of all information obtained through the steel 
espionage system comes from labor and radical publications. 
These publications are scanned for names which are carefully 
filed and indexed. All the principal labor and radical leaders 
in the country who might conceivably be of interest to the 
company are in the files, though of course the spies pay 
special attention to organizers, workers and leaders who are 
active in steel. 

Post office boxes used for receiving espionage information 
are rented with the connivance of post office officials. It is 
necessary for the renter of a post office box to give references. 
The references are either the steel companies themselves or 
high executives in the company. Since these boxes are rented 
under assumed names, it is obvious that postal authorities 
know they are being used for "peculiar" purposes. 

Mr. Tuttle personally has been accustomed to rent six post 
office boxes to receive radical and labor publications and spy 
reports. Scarcely a day passes without a dozen spy reports 
being received in his boxes. Box 134, for instance, to 
which radical publications were sent under the fictitious name 
of Ivan Bezick, was at one time used to receive Carnegie 
Steel spy reports for Mr. Tuttle. 

Many spy reports are received in handwriting and copied 
by a stenographer, after which they are promptly destroyed. 
Two stenographers are kept busy almost continuously copying 


spy reports. But the Carnegie Steel Co. gets most of its spy 
information orally. Its "outside man" cooperates with one 
closer to the labor and radical movement. A common pro- 
cedure is for the "outside man" to meet his confederate at 
some open meeting, where the insider will point out the 
leading individuals in the movement. 

Who are these "inside men"? Usually they are just 
ordinary workers who have got into trouble. The steel com- 
pany's spies find out about their embarrassments and ap- 
proach them with an offer, quite innocent-looking at first. 
Once he is in their toils, the company seems to treat him much 
like any other worker, confident that he will not dare to 

The company makes special efforts to have officials of 
unions and political leaders of labor on its payroll. In ap- 
proaching them it is much more cautious. But it does suc- 
ceed in some cases. Among U. S. Steel's spies on the Iron 
Range were Cletus L. McMillan, former secretary of Lodge 
274, International Association of Machinists, Chauncey A. 
Peterson, member of the International Brotherhood of Elec- 
trical Workers and former Farmer-Labor member of the 
Minnesota state legislature, and A. J. ("Gus") Valley, 
formerly secretary of the Western Federation of Miners. 27 

The U. S. Steel Corporation has no monopoly on hiring 
spies. The evidence on the other companies is not so clear, but 
taken together it makes a convincing picture. When a man 
is caught spying on Inland Steel Co. workers, for example, 
the workers suspect that he is on the payroll of the Inland 
Steel Co. even when the connection cannot be proved by 
documentary evidence like that which is available to prove 
the statements made above on U. S. Steel. 

Here are some illustrations: 

A spy named Rentz, who had got into the Metal Workers' 
Industrial League, was exposed in Philadelphia in May, 1931. 
He confessed that he was employed by the Bethlehem Steel Corp. 


and had also been in the service of the U. S. Department of 

Another spy named Shawalow was exposed in the same area 
in January, 1932. 

The Red Billet, published by the Communist Party nucleus in 
the plant of the Republic Steel Corp., in June, 1931, exposed a 
spy named Jagumis. The man lost his job with the company 
soon after, allegedly because he had ceased to be of use to it. 

Eighteen steel workers were fired from the plant of the Inland 
Steel Co. at Indiana Harbor in May, 1928. This was attrib- 
uted to the fact that they had joined the Trade Union Educa- 
tional League, and Frank Lance, electrician, of East Hammond, 
who worked in the mill and had joined the League and the Com- 
munist Party, was blamed. When put under charges by the 
party, he failed to appear in his own defense. 

Foster's chief lieutenant at Wheeling in the strike of 1919 was 
later shown to be a spy. 28 The chief companies in this area are 
the Wheeling Steel Corp. and the Weirton Steel Co. (now a 
subsidiary of the National Steel Corp.). The U. S. Steel Corp. 
also has plants near by. Definite evidence is available showing 
that the Wheeling Steel Corp. has used spies. 

The accumulated evidence of spy exposures leaves no room 
for reasonable doubt that all the principal steel companies 
use the spy system as a matter of course. 

The chief use that the companies make of the information 
secured through spies is to see to it that the victims whose 
names have been secured are fired and blacklisted. The black- 
list may extend to all the companies in a given area. A minor 
official of the T. C. I. told the writer in 1929 that a man 
who had seriously offended that company had better change 
his name or he would not be able to get work in the Birming- 
ham area. Instances of the operation of the blacklist could 
be supplied, if necessary, from nearly every steel plant in the 
country where there has been any organization activity. 
Militant workers applying for work at the Gary plant of the 
Illinois Steel Co. have been told openly, "You can't get work 
here ; you are too much of a Bolshevik." 

When for any reason the company has not secured the 


information it desires and is unable to spot the leaders, it 
sometimes resorts to mass firing. The most spectacular ex- 
amples are furnished by the wholesale discharges from the 
Johnstown (Pa.) plant of the Cambria Steel Co. (since ab- 
sorbed by the Bethlehem Steel Corp.) in the steel strike of 
1919, and the discharge of several hundred workers from the 
Homestead plant of the Carnegie Steel Co. in 1901, when 
the union had just been revived. When organization work 
was first started in the plant of the Blaw-Knox Steel Co. at 
Blawnox, Pa., in 1931, the workers took great precautions 
about their first meeting, and held it at night on an island 
in the Allegheny River. Next day over a dozen men were 
fired, but not the "right" ones. The McKeesport Tin Plate 
Co. is stated to have met an organization move on the part 
of its workers in the spring of 1932 by firing all who had 
been seen listening to the organizer at an open-air meeting. 
The effectiveness of the spy system has been much exag- 
gerated. A very large part of the spy's work merely dupli- 
cates information that is already public property, and a 
considerable portion of the remainder is inaccurate or irrele- 
vant. 29 Spies can be spotted. Methods of detecting them 
have been tested and found adequate. Above all, the effec- 
tiveness of the spy is not great enough to check a really wide- 
spread organization move. This truth was demonstrated in 
the strike of 1919 and has been proved over again several 
times since. 

Who Benefits by "Welfare"? 

In their "welfare" policy the companies follow the same 
general policy that we have seen them using elsewhere in their 
dealings with the workers that of attempting to split the 
workers' ranks. The stock-purchase, home-owning, relief, 
and pension plans are especially designed to appeal to the 
skilled, settled worker the "family man" and to persuade 


him, if possible, that he is a substantial citizen; in a word, 
to give him a petty-bourgeois psychology. 

But the crisis has shown many of these "solid citizens" 
how nearly equal they are to the unskilled before the law of 
profits. The workers cannot forget that the firm that sells 
them stock and offers them a few groceries at the end of a 
long roll of red tape, is the same firm that plants spies in 
their organizations and blacklists those of their fellows who 
fight for good conditions. 

How much does "welfare" cost the companies? As 
pointed out above, there is no agreement about what really 
constitutes "welfare." U. S. Steel pads its "welfare" expendi- 
tures so openly that the Welfare Account must be a standing 
joke around the corporation offices. George W. Perkins, 
member of the board of directors and for a time chairman 
of the finance committee of U. S. Steel, said to the Stanley 
Committee in 191 1 that a contribution of $3,000 made to aid 
in financing a second edition of George P. Curtiss's Protec- 
tion and Prosperity should have been charged to "Welfare 
Work," and added, "We do a great deal of that." Even so, 
the expenditures on "welfare" from 1912 through 1925 were 
only 3.2% of the payroll. The proportion for the industry 
as a whole is undoubtedly lower. 30 This compares with em- 
ployers' expenditures for social insurance of more than 
10% of the payroll in countries like France and England, 
where all steel workers come under the compulsory sickness 
insurance, old age and invalidity insurance and, in England, 
under the national unemployment insurance as well. In the 
Soviet Union, the number of risks covered by state social 
insurance and the degree of provision for them is much 
greater than in any other country, and the proportion of the 
payroll devoted to this purpose correspondingly larger. 31 

The officers of the companies have never denied that "wel- 
fare" paid. An official statement from the Bethlehem Steel 
Corp. in 1925 contained this passage, 


These plans [i.e. "personnel work"] have been put into prac- 
tice because they are considered good business and in line with 
good business policy. Accidents, turnover, waste, etc., are all 
expensive and reduce production and net profits. 

U. S. Steel has, it is true, taken a different line on occasion. 
In 1920, in a speech before the American Iron & Steel Insti- 
tute, Mr. Charles L. Close of U. S. Steel made the statement 
that "primarily [welfare work has been] purely humani- 
tarian. . . ." But six years later Mr. Close came to heel 
when the Bureau of Safety, Sanitation and Welfare, of which 
he was head, published the company's Twenty-Fifth Anni- 
versary Bulletin, in which is found this classic statement, 

The [U. S.] Steel Corporation is not an eleemosynary insti- 
tution. All its activities for the good of the worker, apart from 
considerations of humanity, have been amply justified by plain 
business reasons they paid eventually. The men who direct the 
policy of the Corporation have never lost sight of the fact that 
the first object of any company is to make money for its stock- 

When a steel company hands its workers a present in the 
shape of "welfare" paid for by the company, the discerning 
worker perceives inside the silken glove of company unions, 
stock purchase plans, pensions, and company contributions 
(if any) to group insurance the mailed fist of company police, 
company towns, spies and blacklists. It cannot be too 
strongly stressed that the "welfare" plans are nothing more 
than the company's way of buying itself off cheap from wage 
increases, social insurance, and genuine unionism. Every one 
of the "welfare" plans we have discussed is directed against 
the workers just as definitely as the company payments to 
corrupt and complacent government officials for their help 
in smashing workers' organizations. Thus it is not surpris- 
ing to find that company unions are ineffective in remedying 
genuine grievances, stock purchase plans are ineffective in 
providing a safe investment for workers' savings, pension 


plans provide no real security for the aged, and group in- 
surance is a business enterprise in which the profits are shared 
between the insurance company and the steel company. All 
are part of the company's program, which emerges in its 
true light when the spy system is studied in detail to extend 
its control to the utmost possible degree and to reduce the 
workers as nearly as possible to the status of serfs. 




FROM the preceding chapters it will have become evident 
that the big steel companies act with striking unanimity on 
matters affecting hours and wages. This they do as a 
matter of policy in order that no one of them shall have an 
advantage over the other in the matter of labor cost. It is a 
matter of common knowledge that the big companies also 
act together on prices, so that steel has become known as a 
"trustified" industry. 

Everybody has heard of the "steel trust." But who can 
define just what he means by the term? Is the "trust" the 
United States Steel Corp., the giant that sets wages and 
prices and conditions for the bulk of the industry? That 
would be a narrow view. Rather the "trust" includes all 
the important firms in the industry. U. S. Steel is the 
leader; but why do the others follow its lead? Why, when 
U. S. Steel shuts down its plants and holds prices some- 
what above the level which would be forced by cut-throat 
competition, do the other firms refrain from stealing its 
markets, shade prices only a little, and come quickly to heel 
when the big leader announces a rise in prices ? There must 
be some reason other than U. S. Steel's immediate control of 
the market for steel ; for the giant, as we shall see, does not 
have as much as 60% of the ingot capacity even in the district 
where it is strongest. In this chapter we shall tell something 
of the reasons for forming the trust ; of the companies that 
comprise it, the relations between them, and the powers be- 



hind them; and the methods they use to assure joint action 
among themselves. 

The steel industry has developed on a grand scale. Given 
a large market free from tariff barriers, the engineer has 
been free to experiment and to select the size plant which 
will produce cheapest; and in steel, that size has been 
enormous. Ever since the manufacture of steel rails became 
definitely established in the United States about 1875 
American steel makers have astonished the world not only 
by the size of their furnaces and mills but by the way they 
scrapped an old plant before it was worn out, in order to 
build a bigger one. 

How far has this development gone, and how rapidly? 
The Census of Manufactures gives some idea of the trend in 
the twenty years to 1929. The following table shows how 
average physical product per establishment a fairly good 
measure of the scale of production has nearly doubled in 
steel works and rolling mills, and has more than trebled in 
blast furnace operation. 

MENT, IRON AND STEEL, 1909-1929 

(Based on Census of Manufactures.) 

Blast furnaces Steel works and rolling mills 

Index Index 
Year Long tons (1919 = 100) Long tons * (1919 = 100) 

1909 123,000 79 43>ooo 84 

1914 145,000 93 43ooo 84 

1919 .... 157,000 100 51,000 100 

1925 299,000 191 69,000 135 

1929 405,000 258 82,000 ,161 

* Finished rolled products and forgings. 

These figures, although the best available, give only a rough 
idea of the trend because the census definition of an "estab- 
lishment" is vague and indefinite. As a rule, the term signi- 


fies a single plant or factory. In some cases, however, it 
refers to two or more plants operated under a common own- 
ership and located in the same city, or in the same county 
but in different towns. On the other 1 hand, separate reports 
are occasionally obtained for different industries carried on 
in the same plant, in which event a single plant is counted 
as two or more establishments. 1 Thus blast furnaces and 
steel mills are listed as separate establishments, though they 
may be part of the same plant. The figures give no indica- 
tion of the concentration of ownership and management in 
fewer and fewer hands. 

The average number of workers per establishment, like 
the physical product per establishment, has been increasing, 
but at a slower rate. Indeed, from 1919 to 1929 the only 
increase has been that which resulted from combining in one 
plant processes formerly conducted separately.* Moderniza- 
tion has brought to certain plants tremendous reductions of 
working force, even when production in such plants was 
increasing. Such modernization has of course been char- 
acteristic of other large-scale industries too. Steel is one 
of the two or three largest industries, as measured by workers 
per establishment, in the United States. 2 In point of workers 
per employer, it is probably the largest of all, especially if the 
workers in the steel mills are included with the workers in 
allied industries who are employed by the same firm. 

In horsepower per establishment also blast furnaces and 
steel and rolling mills have ranked first or second among the 
industries of the country. 8 There has been a tremendous 
and continuous increase since 1909, reflecting both mechani- 
zation and the rapidly developing scale of production. 

It is not intended to imply that the larger the mill the 
more efficient it becomes in the engineering sense. The large 
firms can, it is true, produce with less expenditure of labor 
power and mechanical energy per unit of product than the 

* See Appendix VIII. 


small firms, given a full order book ; but the very large firms 
do not necessarily have any engineering advantage over the 
fairly large firms. 

It is interesting to consider how few of the biggest mills 
and furnaces have been owned by U. S. Steel. At the time 
that U. S. Steel was formed, the world's record for the 
production of four-inch billets in a 24-hour period was held 
by the Lorain Steel Co., a relatively small concern which 
joined the big combine. The largest blast furnace in the 
country (i.e., the one with the greatest daily output) belonged 
in 1929 not to a subsidiary of U. S. Steel but to Jones & 
Laughlin ; when the record was broken, Republic Steel broke 
it. The first 35o-ton steel furnace was introduced by the 
Weirton Steel Co. when it was still a small firm. The Brier 
Hill Steel Co. was a still smaller "independent" at the time 
of its absorption by Youngstown Sheet & Tube in 1923, yet 
even then Brier Hill could claim to possess the largest mill 
building under one roof in the country. The largest plate 
mill is claimed by the Lukens Steel Co., and the largest tin- 
plate works by the McKeesport Tinplate Co. Both of these 
companies are relatively small. There are possibilities of 
joint action among companies for particular purposes, to se- 
cure the economies of large-scale operation ; for example, the 
use of huge machinery at the Mahoning ore mine in Minne- 
sota, which supplies several steel companies with ore. 


It was not a desire to secure further economies from large- 
scale production, but a desire to preserve profits for the com- 
panies already in existence and to secure further profits 
through the establishment of monopoly prices, that led to 
the formation of U. S. Steel in 1901. It was the bankers, 
not the engineers and technicians, that guided the formation 
of that giant combine. There were reasons of business strat- 
egy that led these bankers to seek combination for its own 


sake. The search for the most profitable size of operations 
had made steel into a large-scale industry ; the final step, the 
establishment of virtual monopoly, was taken by the bankers. 

The larger the scale of operations on which an enterprise 
is conducted, the greater is the burden of overhead costs 
interest, taxes, salaries, insurance, depreciation. When mar- 
kets are inactive, a desire to make something anything 
toward the overhead prompts the manufacturer to sell at 
prices right down to prime costs. He may do this even in 
good times if he thinks he has the edge on his competitors 
in technical equipment and strategic position, so that he can 
force them to the wall. 

Such undercutting, however profitable it may be to the 
individual manufacturer, is ruinous in the long run to his 
group. Small fluctuations in sales cause large fluctuations 
in the rate of profit. Capitalists cannot withdraw fixed 
capital. They cannot "lay off" their machines. Once they 
have invested they wish to safeguard their investment. They 
may be induced to enter into an agreement not to cut prices 
or, since such agreements tend to break down, the successful 
competitor may devour his rival, or two or more competitors 
may combine. Economists use the term horizontal integration 
to describe the combination of formerly competing companies. 

Everybody knows that the U. S. Steel Corp., formed in 
1901 by the J. P. Morgan interests and since then ruled by 
them, was created in order to suppress competition among 
the big steel firms and keep it suppressed.* The company 
is still dominant in the great territory between the Rocky 
Mountains and the Alleghenies, where it overshadows by far 
every "independent" that might be considered as a rival. On 
the Atlantic seaboard, U. S. Steel has never had any com- 
parable importance; instead Bethlehem Steel, which in 1901 
did not rank as high in the East as half a dozen other steel 

* We should perhaps except Prof. A. S. Dewing (see Appendix X) 
and E. S. McCallum (see his book already quoted). 


companies, has by a series of mergers become as powerful 
in the East as U. S. Steel is in the Midwest. These two 
companies between them control the Pacific Coast area. 

The Midwest 

The U. S. Steel Corp. represented a combination of the 
leading steel firms in the area bounded on the east by the 
Allegheny Mountains, on the south by the Ohio River, and 
on the west by the Mississippi. This area produces over 
So% of the country's steel. In the western section of the 
Midwest, where U. S. Steel still produces 51.5% of the 
ingots and 53% of the finished products, its preeminence is 
greater than in the so-called middle section (western Penn- 
sylvania, eastern Ohio, West Virginia and the Buffalo dis- 
trict of New York), where it has only 41.7% of the ingot 
capacity and 36% of the capacity of finished rolled products. 4 
But even in the middle section it leads every other company. 

U. S. Steel's dominance in the Midwest has never been 
seriously challenged. Up to 1930 all really important mergers 
proposed affecting this area had mysteriously broken down. 
The Republic Steel Corp., formed by merger in 1930, has a 
big ingot capacity in the Middle West but produces largely 
for the specialty market; its alloy steels compete compara- 
tively little with U. S. Steel's products. Bethlehem Steel has 
only 11% of the ingot capacity and 6% of the capacity for 
rolled products in the middle district of the Midwest. 

U. S. Steel's position has been considered impregnable 
largely because it has Lake ore to outlast the other com- 
panies by from 10 to 20 years, and controls 76% of the 
"iron ore in sight" in the Lake Superior region. But Lake 
Superior ore will not be the key to steel dominance in the 
next generation as it was in the last. The supplies are defi- 
nitely limited, and their production will presumably show a 
marked drop after 1945, even if improved methods of mining 
and beneficiation (increasing the percentage of ore content) 


prevent any great increase in costs of production per ton up 
to that time. The St. Lawrence waterway would bring the 
supply of high-grade foreign ores within the reach of the 
iron and steel companies in the Great Lakes area. Odd lots 
of ore are already coming through the canal, and the steel 
works on the Atlantic seaboard have been using foreign ore 
for years. U. S. Steel has not monopolized and cannot 
expect to monopolize the enormous inland ore deposits of 
Brazil. These amount to nearly one-eighth of the world's 
actual reserves, average 67.5% iron content as compared with 
about 50% for Lake Superior ore to-day, are low in phos- 
phorus, contain practically no sulphur and a mere I to 4% 
of silica, and only await transportation facilities to be used. 

The South 

U. S. Steel did not complete its dominance of the Missis- 
sippi Valley until 1907, when it took advantage of the panic 
to gobble up the leading company in the important Birming- 
ham area the Tennessee Coal & Iron Co., later known as 
the Tennessee Coal, Iron & Railroad Co. 

This coup was sanctioned in advance by President Theo- 
dore Roosevelt and his attorney-general, and was carried out 
so adroitly that many believe, even to-day, that it was a 
major factor in halting the panic. But O. M. W. Sprague's 
"History of Crises under the National Banking System" 
makes it clear that the worst of the panic had already passed. 5 
And no one has ever explained why Morgan and his crew 
had to buy the Tennessee company stock instead of making 
a loan to the embarrassed broker Schley.* U. S. Steel has 

* Frick advocated a loan. U. S. Steel by the transaction absorbed 
its chief competitor, which was closely affiliated with another com- 
petitor, and was considering a merger which would have brought in 
also a third. It obtained control of an ore reserve of over 500,000,000 
tons (in extent a third as large as the holdings then controlled by 
U. S. Steel in the Lake district) and coal reserves of 1,000,000,000 tons 
as well. Who can doubt that these facts explain why Morgan in- 


dominated Birmingham and its markets ever since. It con- 
trols 41% of the "iron ore in sight," including the bulk of 
the best deposits. 

The East 

When the U. S. Steel Corp. was formed, there were a 
number of important iron and steel firms east of the Alle- 
ghenies, most of them with old equipment. None was domi- 
nant. Negotiations were undertaken to bring the Midvale 
Steel Co., important armament firm, into the U. S. Steel 
combine, and the Morgan syndicate at one time held all the 
stock of the Bethlehem Steel Co., which had been purchased 
by Charles M. Schwab, first president of U. S. Steel; but 
neither firm eventually came into the giant combine. 

The Bethlehem Steel Co. reorganized in 1904 as the Bethle- 
hem Steel Corp. and took over the shipbuilding properties 
of the unsuccessful U. S. Shipbuilding Co. It has since ex- 
panded gradually in both the shipbuilding and steel producing 
fields, and has absorbed all but two of the important steel- 
making "independents" in the Northeast.* 

The dominance of Bethlehem on the Atlantic coast matches 
the dominance of U. S. Steel in the Midwest. Bethlehem has 
47-3% f the rated steel ingot capacity and 34% of the 
capacity of finished rolled products in the eastern area, while 
U. S. Steel in the same area controls only $% and g% of the 
tonnage respectively. Bethlehem imports most of its iron 

sisted on purchasing the stock instead of making a loan to Schley? 
In Trust and Corporation Problems, Seager and Gulick contend (p. 
234) that the price paid for the T. C. I. stock was high, and it was, 
compared with the market value of the stock. But the market value 
was being determined by a relatively small amount of stock. The 
members of the controlling syndicate always insisted they were not 
anxious to sell. The U. S. Steel directors would hardly have dared 
to buy out the T. C. I. except under cover of the panic. (See Corey, 
House of Morgan, pp. 345-347, for the best short account of the 
whole affair.) 

*The two are the Lukens Steel Co. of Coatesville and the Alan 
Wood Steel Co. of Conshohocken. 


ore, chiefly from Cuba and Chile, in both of which countries 
it operates iron mines. The old equipment in its mills has 
been largely modernized, and a big new plant has been built 
at Sparrows Point, near Baltimore, Md. the only large 
American plant on tidewater. 

The Rocky Mountains and the Pacific Coast 

The Colorado Fuel & Iron Co., a Rockefeller concern, was 
invited to join the U. S. Steel Corp. when the latter was 
formed, as the Lake Superior Consolidated Iron Mines (also 
a Rockefeller concern) actually did. However, the C. F. & 
I. has remained aloof. It is the only important iron and steel 
firm in the Rocky Mountain area. 

There are no blast furnaces on the Pacific Coast, but sev- 
eral steel and rolling mills have been built to supply the local 
market. In 1929-30 the important ones were merged with 
U. S. Steel (which acquired the Columbia Steel Corp., with 
a rated capacity of 340,000 tons of ingots) or with Bethle- 
hem (which got the Pacific Coast Steel Co. and the Southern 
California Iron & Steel Co.). 

The United States as a Whole 

The following table shows the rated capacities and number 
of employees of the 10 largest steel ingot producers in the 
United States. These companies between them control over 
84% of the country's capacity of raw steel. It is estimated 
that these and ten others make 90% of the gross sales in the 
steel industry, the other 10% of the sales being made by 
concerns which are engaged primarily in finishing and fab- 
ricating steel products, and are in the steel business only 
incidentally. 6 

Some idea of the progress of the merger movement may be 
obtained from a comparison with the corresponding list as 
of January i, 1921. The ten leading producers then con- 
trolled only 68.8% of the total rated ingot capacity. Cambria, 


Lackawanna and Midvale, then among the first ten pro- 
ducers, have since merged with Bethlehem. 


Rated Ingot Capacity 
as of January 1, 1932 7 
Name of Corporation (Millions of tons) No. of Employees * 

1. U. S. Steel Corp 26.78 224,980** (1929) 

2. Bethlehem Steel Corp. .. 8.61 64,300 (1929) 

3. Republic Steel Corp 4.81 30,000 (1930) 

4. Jones & Laughlin Steel 

Corp 3.42 22,300 ( 1929) 

5. Youngstown Sheet & 

Tube Co 3.12 20,100 ( 1929) 

6. National Steel Corp 2.00 12,500 (1931) 

7. Inland Steel Co 2.00 8,500 (1929) 

8. American Rolling Mill Co. 1.88 11,300 (1929)' 

9. Wheeling Steel Corp. ... 1.61 17,300 (1929) 
10. Crucible Steel Co. of 

America . i.oo 

Total of 10 companies... 52.23 
Total U. S. capacity .... 65.75 

* Includes all employees. For number of iron and steel workers 
only, employed by these and other companies, see Appendix IX. 

** 162,500 in manufacturing properties; 21,834 in coal and coke 
properties; 10,876 in iron ore properties; 24,199 in transportation 
properties, and 5,571 in miscellaneous properties. (Annual Report for 
1929, p. n.) 


Steel companies have grown in size not only through the 
development of huge plants and the combination of formerly 
competing companies, but also through the combination of 
successive stages in production or "vertical" combination. 

Steel makers in the early days sometimes had difficulty ia 
filling orders. The coal, coke and ore companies were care- 
less about the quality they supplied, and did not always live 


up to their contracts with the steel firms if they got a better 
offer. So, as the iron and steel companies increased their 
scale of operations, they also began buying coal mines and 
ore mines and building coke ovens. Iron and steel companies 
control directly 11% of the bituminous coal output of the 
country, according to a 1933 estimate ; 8 and certainly more 
than half the output of iron ore and an even larger propor- 
tion of coke production is controlled by steel firms. 

Coke ovens, blast furnaces, steel mills and rolling mills 
have been linked more and more closely from a technical 
point of view. Blast furnaces supply pig iron direct to steel 
furnaces in molten condition, and steel mills furnish ingots 
to rolling mills by way of the "soaking pit" which keeps them 
continuously hot. Surplus gases generated at the blast fur- 
naces and coke ovens are utilized for by-products and as 
auxiliary fuel. Of course technical association of processes 
is not the same thing as financial integration, as the building 
industry shows. A blast furnace has been known to supply 
molten ore direct to a steel mill which was under separate 
management and separate ownership. But there is a strong 
tendency in iron and steel for close technical connection of 
consecutive stages in production to be followed or accom- 
panied by corresponding ties of a managerial and financial 

All of the big steel companies and many of the smaller 
ones are vertical combinations. As early as 1919, there were 
134 vertically integrated concerns in iron and steel. Four 
of these concerns included each of six stages from the pro- 
duction of raw material to the manufacture of complex fin- 
ished products; seven included five out of six stages in 
production ; and 16 covered four stages. 9 Even these figures 
give an inadequate idea of the extent of vertical combina- 
tion in 1919, since the manufacture of coke was not treated 
as a stage in the production of iron and steel. 10 Most or all 


of the big concerns have operated their own coke ovens since 
before 1919. 

Vertical integration has continued since 1919, with special 
emphasis on the inclusion of selling agencies. Steel com- 
panies have also tried to get a full line of finishing mills so 
as to be able to supply all the different products in widely 
separated markets. 11 Sometimes this kind of vertical inte- 
gration has involved joint action by supposedly competing 

Technical considerations draw the heavy iron- and steel 
industry close to certain other industries. Iron and steel 
companies have long manufactured cement, and in Ohio the 
Pickands-Mather iron group entered into the utility field 
when its blast furnaces began to supply gas to certain munici- 

The finishing trades have reached back into the heavy 
industry to control the source of their own raw materials. 
It was stated above that only about 20 companies make the 
production of raw or semi-finished steel their main business. 
Most of the other steel-producing firms are primarily finish- 
ing and fabricating concerns. Some of the larger finishing 
concerns reach all the way back to the ore and coal mines.* 
The steel companies induced the Standard Oil group to stay 
out of the manufacture of tubes only by granting it rebates 
on tinplate. 12 

The process of vertical integration does not proceed with- 
out setbacks. A tendency for the steel companies to lose 

* Examples are the International Harvester Co. (through its sub- 
sidiary the Wisconsin Steel Co.) and the Ford Motor Co., which latter 
also operates a disassembly conveyor to convert used motor cars into 
iron and steel scrap for its furnaces. General Motors Corp., on the 
other hand, has relied on the looser method of community of interest. 
It is the largest stockholder in the Newton Steel Co., which is a 
maker of steel sheets and is affiliated with the Corrigan-McKinney 
Steel Co., with large ore and coal reserves. General Motors (domi- 
nated by Morgan and duPont) buys about 60% of its steel from the 
U. S. Steel Corp. (clearly a Morgan concern). 


control of the final stages in the preparation of steel for the 
user has appeared since the coming of the automobile. Com- 
panies which have bought coal mines capable of supplying 
their needs 100 years in advance are finding the carrying 
charges heavy in the crisis, and some seek to resell their 
mines. But the tendency toward vertical integration has only 
been slowed up, not reversed. 

Vertical combination brings ore and coal miners, coke 
workers, transport workers, and workers in the heavy and 
light iron and steel industry under a common employer. 
Horizontal combination and "gentlemen's agreements" en- 
able the steel firms to follow a united policy with regard to 
labor. All the workers in the heavy industry and many 
workers in other industries have interests in common which 
can be looked after only by broad united action. 

Integration, both vertical and horizontal, is more extensive 
and significant in iron and steel than in any other industry. 
The financial interests have frequently found their way to 
control through the merger route, as a survey of mergers in 
the last generation will show. 


A few of the larger companies have fought shy of hori- 
zontal mergers, though all have expanded vertically. The 
Jones & Laughlin company turned down an invitation to 
join the U. S. Steel Corp. in 1901. The Inland Steel Co. 
(Chicago), the Lukens Steel Co. (Coatesville), and the three 
purely southern "independents" in the Birmingham area 
(Gulf States Steel Co., Woodward Iron Co. and Sloss-Shef- 
field Steel & Iron Corp.), have remained under about the 
same ownership and have not combined with any competing 
companies. Most of the other important concerns, however, 
have participated in horizontal mergers in the period since 
1901, and especially in the decade 1920-1930. 


Eaton Challenges Morgan 

In this period of spectacular mergers, no consolidator at- 
tracted more attention than Cyrus H. Eaton, partner in the 
banking firm of Otis & Co. of Cleveland. He controlled 
Continental Shares, Inc., and other investment trusts and 
had big interests in public utilities and rubber. In association 
with a group headed by William G. Mather, big ore dealer 
and chairman of the Otis Steel Co. of Cleveland, Eaton built 
up the Republic Steel Corp., a combine composed largely of 
specialty firms, which on its completion in 1930 ranked third 
in ingot capacity. Continental Shares controlled the Cliffs 
Corp. This company in turn controlled the Cleveland Cliffs 
Iron Co., the oldest and largest independent mining company 
in the Lake Superior region, with the largest supply of "free" 
ore for sale in the country. (It mined for sale 3,000,000 tons 
of ore in 1929.) Cleveland-Cliffs bought control of the 
Corrigan-McKinney Steel Co. of Cleveland, with 1,000,000 
tons of ingot capacity. Associated with the Eaton interests 
were also the great ore and iron concern of Pickands, Mather 
& Co., and the M. A. Hanna Co., another large producer of 
ore. It was planned to bring into a combine with Cleveland- 
Cliffs the Republic Steel Corp., which is definitely short of 
ore (in 1930 it had to buy a million tons of ore on the open 
market), and possibly Pickands, Mather as well. Such a 
merger as this, considering the close association of the Hanna 
interests, would have caused Republic Steel to rank along- 
side U. S. Steel as the only big steel firms which were not 
definitely short of ore for current requirements. 

Eaton's group bought into Youngstown Sheet & Tube 
and Inland Steel, which firms have had adjoining plants at 
Indiana Harbor ever since Youngstown Sheet & Tube pur- 
chased the Steel & Tube Co. of America in 1923. Eaton 
tried to get the two companies to merge but negotiations 
broke down in 1928. The Eaton interests bought into the 


Woodward Iron Co. and the Gulf States Steel Co. Spang- 
Chalfant & Co. (Pittsburgh) was drawn into the Eaton orbit 
when it entered into an agreement with Republic for joint 
operation of a steel pipe plant at Butler, Pa., to manufacture 
seamless tubing. The Eaton interests elected a director on 
the board of the Newton Steel Co. of Cleveland. At the 
peak of his ambitions, in November, 1929, Eaton made an 
unsuccessful move to get hold of a big block of Bethlehem 

Just what Eaton planned to do with the Youngstown Sheet 
& Tube Co., after the negotiations with Inland failed in 
1928, is not known. He denied that he planned to merge it 
with the Republic Steel Corp. Whatever his plan was, he 
cared enough about it to fight a merger which was arranged 
early in 1930 between Youngstown Sheet & Tube and Beth- 
lehem; and it was this fight which eventually broke him. 
Youngstown Sheet & Tube officers saw the decline of 
Youngstown as a producing center and desired to unload and 
step out. Bethlehem was reported as seeking connection with 
a midwestern concern manufacturing tubes. A merger plan 
was secretly drawn up, and Eaton did not hear of it until it 
was submitted to the stockholders for ratification. 

Eaton challenged the merger and called for the Sheet & 
Tube stockholders to defeat it. An exciting battle for proxies 
resulted in a victory for Bethlehem. Eaton then succeeded 
in getting an order from the Mahoning County district court 
enjoining the merger as contrary to the interests of the Sheet 
& Tube minority stockholders. But Eaton's position in Con- 
tinental Shares had meanwhile been undermined, perhaps 
through a flank attack by interests back of Bethlehem, and 
he was forced out of that concern, at the same time becom- 
ing heavily involved in other lawsuits. Meanwhile the finan- 
cial collapse had destroyed the basis of the original merger 
between Youngstown Sheet & Tube and Bethlehem, and the 
latter concern was reported to have established an identity 


of interest with the Pittsburgh Steel Co., large producer of 
seamless steel tubing. Some of the Continental Shares hold- 
ings were sold at auction in 1933. 

"Independents" Grow 

The most successful merger since the war, from the finan- 
cial standpoint, has been the National Steel Corp., formed at 
the end of 1929 by the M. A. Hanna interests to exploit the 
growing market for steel on the Great Lakes, especially 
around Detroit. It took in the Weirton Steel Co. of Weir- 
ton, W. Va., notorious as the last large northern company 
to retain the 1 2-hour day; the Great Lakes Steel Corp. of 
Ecorse, Mich., founded in 1929; and several Hanna com- 
panies engaged in producing, transporting, and smelting iron 
ore, one of which was the Hanna Ore Mining Co. In 1931 
the National Steel Corp. acquired the Michigan Steel Corp. 
The National Steel Corp. has a rated ingot capacity of over 
2,000,000 tons. Through extensive leasing of ore lands by 
the M. A. Hanna Co. of Cleveland in the interests of the 
Hanna Ore Mining Co., the National Steel Corp. has be- 
come the second largest holder of Lake ore reserves. It re- 
cently entered the Chicago area. 

The American Rolling Mill Co. of Middletown, Ohio, 
expanded greatly on the successful completion in 1927 of 
its experiments in the continuous sheet-rolling process. It 
acquired control of Norton Iron Works, Inc., at Ash- 
land, Ky., took a half interest in the Hamilton Iron and Coke 
Co., at Hamilton, Ohio, which it formed jointly with the 
Koppers interests, and obtained the properties of the Forged 
Steel Wheel Co. at Butler, Pa., which had successfully imi- 
tated the Armco patent and was threatening intensive com- 
petition, by buying 99% of the common stock of the 
Columbia Steel Co. of Elyria, Ohio, which had just acquired 
the control of the Forged Steel Wheel Co. In 1930 it 
acquired the Sheffield Steel Corp. of Kansas City, Mo., and 


began to operate in collaboration with John Summers Sons 
Co. a sheet mill at Shatton, England. Already in 1921 it 
had acquired the Ashland Iron & Mining Co. of Ashland, 
Ky. It is the eighth largest steel producer in the U. S., 
and has licensed its continuous rolling patents to nine other 
steel companies, including U. S. Steel. 


The number of stockholders of each of the three largest 
steel companies, iruns into thousands and even tens of thou- 
sands. But control of each individual company is concen- 
trated in a very few hands. 

Management depends on banks for credit and for advice 
on present and future business conditions. The bankers and 
financiers are in a strategic position. They have taken over 
outright the management of certain steel companies, includ- 
ing U. S. Steel. The men who headed certain other steel 
companies have themselves gone onto the boards of big 
banks. In either case, the result is the same. The big steel 
companies are more and more tied up with the banks, and 
the banking interests exercise greater and greater influence 
in the steel companies' management. As Lenin put it, "The 
predominance of finance capital over all other forms of capi- 
tal means the dominating position of the rentier and the 
financial oligarchy. . . ," 18 

The power of the Morgan group in U. S. Steel depends 
not only on stock ownership although in a corporation 
where stock ownership is so widely distributed the 10% of 
the total estimated to be directly owned by this group might 
be sufficient in itself but also on the fact that J. P. Morgan 
& Co. has acted as banker for the firm ; that it is the power 
back of the brokers who have usually had on hand up to 
25% of all the outstanding common stock of U. S. Steel; 
and that the Morgan firm and allied banks administer many 


trust funds which control in the aggregate a substantial 
block of stock. 

The evolution of a firm from local control to Wall St. 
domination is well illustrated by the history of Bethlehem. 
The Bethlehem Iron Co. remained under local control until 
about 1886, when the great expansion occasioned by the 
firm's entry into the armament business caused it to call on 
that canny Quaker financier Joseph Wharton. He put up 
cash to make munitions. Philadelphia bankers also became 
interested, and by 1901 Edward T. Stotesbury, later a Mor- 
gan partner, had appeared on the board of directors along 
with Wharton. When Charles M. Schwab reorganized the 
concern as the Bethlehem Steel Corp. in 1904, he brought 
with him a group of New York financiers, including the 
celebrated Wall Street speculator Thomas Fortune Ryan. 

Other new faces were added with the post-war consolida- 
tions, and the company drew closer to the Morgan financial 
group. Bethlehem maintains an account of over a million 
dollars with J. P. Morgan & Co. The Morgan firm sup- 
ported Bethlehem stock as well as U. S. Steel stock during 
the stock market crash of 1929. Pres. E. G. Grace and 
Vice-President A. J. Johnston have been on Morgan "pre- 
ferred lists." Since about 1923 the president of Bethlehem 
has sat on the board of the Guaranty Trust Co., a Morgan 
firm, and the president of Guaranty Trust Co. has sat on 
the board of Bethlehem. In most if not all important mat- 
ters of policy Bethlehem acts with U. S. Steel, as for 
example in cutting wages, in export, and in paying off 
bonded indebtedness (in 1929) . Bethlehem is clearly a Mor- 
gan concern, but with representation also from other financial 
interests. Several of its directors have been on the "pre- 
ferred lists" of Kuhn-Loeb. 

The Hanna ore interests in Cleveland form a financial 
group of considerable power. They were active in form- 
ing the Republic Steel Corp., which is interested in their ore 


holdings, and also took the lead in the National Steel Corp. 
merger, M. A. Hanna joining the board of directors of that 
concern. The Cleveland Trust Co. has had directors in 
common with large steel concerns throughout Ohio. The 
van Sweringens are reported to be well intrenched in the 
Otis Steel Co. All three of these interests Hanna, Cleve- 
land Trust Co., and van Sweringens have more or less 
close affiliations with the Morgan group. 

Since 1927 Morgan banks have participated to a greater 
or less extent in bond issues for three other "independents," 
namely, Youngstown Sheet & Tube Co., National Steel 
Corp., and Wheeling Steel Corp. 

The Eaton-Otis-Mather group controls the Republic Steel 
Corp., as already stated, but the Mellon and Hanna interests 
are also represented on the board. The Eaton group holds 
directorates in Inland Steel (dominated by the Block fam- 
ily) and Gulf States Steel, the first time apparently that 
either firm has admitted outside financial interests to its 
board. Gulf States Steel has also had interlocking direc- 
torates with the Chemical Bank (Kuhn-Loeb) and the Bank 
of America (now merged with the National City Bank). 

No financial group has connections in a greater number 
of "independent" steel companies than the Mellon interests. 
This group has established itself securely in the American 
Rolling Mill Co., on whose board it has two directors; in 
Jones & Laughlin, the chairman of whose board since 1927 
has been W. C. Robinson, director of two Mellon banks ; * 
in Republic, where it has two directors ; in Pittsburgh Steel, 
on whose board H. C. McEldowney, president of the (Mel- 

* B. F. Jones, 3rd, of Jones & Laughlin is also director of two Mellon 
banks. W. C. Robinson is a director of the Phelps-Dodge Corp., 
and president of two of its subsidiaries. This company has recently 
drawn close to the Morgan group ; a Morgan partner T. S. Lamont 
sits on its board. Jones & Laughlin has always worked in close 
harmony with U. S. Steel, which as we saw has always been a 
'Morgan concern. 


Ion) Union Trust Co., and two directors of the (Mellon) 
Workingmen's Savings Bank hold seats; in the Alan Wood 
Steel Co., half of whose stock is owned by the Koppers 
(Mellon) interests; in the Mystic Iron Works; and in the 
Davison Coke & Iron Co., a Pittsburgh firm which was 
started in 1929 by a Mellon man. The Mellon contact in 
the National Steel Corp. board of directors is presumably 
Edmund W. Mudge. He is vice-president of the Fidelity 
Trust Co., which is usually listed as a Mellon bank. The 
Mellons are reported to have come into Bethlehem in 1931 
when that firm absorbed the McClintic-Marshall Construc- 
tion Co., theretofore a wholly owned subsidiary of the (Mel- 
lon) Koppers Co. R. B. Mellon is a director of the Crucible 
Steel Co. of America. Andrew W. Mellon was recently 
reported as owning 30,000 shares of U. S. Steel stock, and 
his daughter, Ailsa Mellon Bruce, held 10,720 shares of 
U. S. Steel common in 1931, when the Union Gulf Corp., a 
Mellon concern, also owned 30,000 shares.* 

The Mellons were active in the affairs of several steel 
companies about 1900, and backed H. C. Frick, lifelong 
friend of Andrew Mellon, in Frick's Union Steel Co., which 
was to have rivaled the Carnegie firm. But since the Union 
Steel Co. was absorbed by U. S. Steel (1904), the Mellon 
group has not appeared publicly as a moving force in steel. 
Rather it has tended to concentrate on other fields, especially 
"new" metals like aluminum. 

The Investment Trust 

The term "trust," which formerly was used to describe 
industrial monopolies and dominant industrial firms, is to-day 
usually reserved for the investment trust. This type of 

*U. S. Steel received $96,000,000 in tax refunds during the time 
that Andrew W. Mellon was secretary of the treasury. The amount 
of such refunds was determined not by any mathematical formula but 
by "a species of bargaining" (John N. Garner's phrase). 


organization has occasionally been used for the purpose of 
controlling steel companies. The promoters retain control 
firmly in their own hands and use the money turned over to 
them by speculative-minded small capitalists in order to buy 
up and consolidate corporations. 

The Eaton-Otis-Mather group formed several investment 
trusts, including Continental Shares, Inc., Commonwealth 
Securities Co., International Shares Corp., and the Cliffs 
Corp. The only other important instance in which an invest- 
ment trust has taken an active part in consolidating steel 
firms is that of Pennsylvania Industries, Inc., an investment 
company formerly known as the Oil Well Supply Investment 
Co., which bought into a number of steel firms in the Pitts- 
burgh and Youngstown areas in 1928-29. This concern, 
dominated by the Hillman group (rivals of the Mellons), 
caused the merger of the Standard Seamless Tube Co. with 
Spang, Chalfant & Co., and bought into this concern, the 
A. M. Byers Co., and the Sharon Steel Hoop Co. 

The importance of the investment trust in the iron and 
steel industries seems to lie chiefly in the future. It sup- 
plies a mechanism for further concentrating in a few hands 
control over great quantities of capital. It is thus the latest 
development in the tendency toward concentrated financial 
control over industry. 

Price Control 

It has not been a simple matter to maintain unity of action 
among the steel firms. Up to the turn of the century, pools 
and "gentlemen's agreements" on prices usually broke down. 
It was only when the scale of production got very large and 
a few firms controlled the bulk of the industry, that it was 
possible for prices in the industry to be ruled by lasting 

Since the U. S. Steel Corp. was formed, price wars have 


practically stopped. The methods of controlling prices have 
varied. In the words of Prof. Fetter: 

The unanimity of action in the period before 1907 was mainly 
secured by pools and agreements unquestionably illegal, and from 
1907 to 1911 by "understandings" furthered by the Gary din- 
ners, likewise illegal. . . . The rule was a continued adherence 
of all to a scheme of prices based on Pittsburgh . . . and the 
exception was an occasional period in which reductions of prices 
went to the extreme, as in 1908, 1909, and 191 1. 14 

During the world war prices were set for a time by the 
government. The price structure fell to pieces for a short 
time in the depression of 1921, but was presently re- 
established, and has remained firm, with only minor shadings 
by some companies, to the present time (1933). The Dow- 
Jones average price of eight important iron and steel prod- 
ucts dropped only 9.7% between 1930 (average for the 
year) and December 13, 1932 a period in which raw ma- 
terial prices in general dropped more than 30%. 15 

That the prices set by U. S. Steel have not been competi- 
tive was clearly shown in the Federal Trade Commission's 
hearings on "Pittsburgh plus" (case decided 1924). Prices 
were quoted not "at the mill" but "delivered." The price for 
buyers in Pittsburgh was high enough to enable the Pitts- 
burgh mills to make a profit, and the price for buyers every- 
where else, except in the Birmingham area, was arrived at 
by taking the Pittsburgh price and adding to it a sum equal 
to the freight from Pittsburgh to the point in question. 
Thus, although steel can be produced at Chicago at least as 
cheaply as at Pittsburgh, the price at Chicago on all impor- 
tant steel products up to the war, and on many for some 
years after the war, was higher than the Pittsburgh price 
by the amount of the freight from Pittsburgh to Chicago. 

After 1924 the number of basing points was increased, 
but the practice of quoting prices on a "delivered" basis 
rather than f .o.b. was continued. The present system differs 


from "Pittsburgh plus" only in that the number of basing 
points has been increased from two to as many as 19 (on 
pig iron), the number varying with the product. On sheets 
there are only four basing points; on tinplate, only three; 
and on several products such as tool steel bars and pipe- 
rigid electrical conduit, only two. 

It has been calculated that in "normal" times the "inde- 
pendents" have observed U. S. Steel quotations on 90% 
of their sales. The remaining 10% represent deviations that 
would be sanctioned by that company. 16 There is no ques- 
tion that U. S. SteeFs quotation has been high enough, in 
"normal" times, to allow a comfortable profit to at least all 
the big concerns. 

Spokesmen for the big companies no longer deny that 
prices are deliberately controlled. Myron C. Taylor, chair- 
man of the board of U. S. Steel, spoke in 1932 of "a justi- 
fiable price control that sacrifices some part of production 
volume to secure reasonable ( !) price levels for commodi- 

The leadership of U. S. Steel in the industry has been 
unchallenged for several reasons. Its very strong position 
with regard to ore supply is one. Another is its possession 
of fine modern mills in the best market Chicago which 
gives it a strategic advantage over most other concerns. The 
very heavy capital investment necessary to start a modern 
steel mill is the third and final reason. Business men know 
that they must have strong financial backing for an enter- 
prise such as this; and few financiers feel strong enough to 
set up a major steel company in direct competition with 
J. P. Morgan & Co. 

Prices in some branches of steel production are very com- 
pletely controlled. Only four companies produce heavy 
steel rails, and orders are allocated among them on the basis 
of the traffic they give to the railroads. There is no pre- 
tense at competition. 


The Armament Trust 

The number of producers of armorplate has never been 
above three. Bethlehem was first in the field in 1887, 
armorplate having been previously imported from abroad. 
The Carnegie interests built an armorplate plant at Home- 
stead in 1891. In 1896 the Secretary of the Navy reported 
that Bethlehem and the Carnegie company had never com- 
peted for U. S. government orders, but had divided the busi- 
ness between them. The imperial Russian government placed 
an order about 1892 with Bethlehem in a period of slack 
business at $249 a ton, whereas the U. S. government was 
paying $616 a ton. But when the Tsar's government sought 
to repeat its good bargain, the Carnegie and Bethlehem com- 
panies simply divided the orders and charged $520 a ton. 

The Midvale Steel Co. entered the field before 1904, but 
without causing any increase in competition. In the con- 
gressional debates on the naval appropriation bill in 1913, 
Senator Ashurst of Arizona said, 

Bids were opened about ten days ago by the Secretary of Navy 
for approximately 8,000 tons of armorplate for the dreadnought 
Pennsylvania. The companies [bidding] were represented here 
by Pres. Dinkey of the Carnegie Co., Vice-Pres. Johnston of the 
Bethlehem Co. and Vice-Pres. Petrie of the Midvale Co. These 
gentlemen all stopped at one of the leading hotels here and were 
frequently in conference. As a consequence, when the bids were 
opened it occasioned no surprise to find that the bids did not 
vary a dollar a ton between the three companies, and that the 
bids were in fact $25 a ton more than the price received by these 
companies on the last previous contract. 17 

The question of government manufacture of armorplate 
was before Congress almost continuously for twenty years 
before the world war, and twice Congress appropriated the 
money for the erection of such a plant. But both times 
there was a joker in the act, and both times the effort came 


to nothing. 18 Finally in 1918, the money having been again 
appropriated, work actually began on a plant at Charleston, 
West Virginia. It was completed after the war, but has not 
operated except for a trial run. Midvale was absorbed by 
Bethlehem in 1922-23. 

The same companies which controlled the manufacture of 
armorplate also controlled the bulk of the manufacture of 
ammunition down to the war, although they shared the field 
with the duPont powder interests. The records are full of 
complaints by certain government officials who said that 
they were unable to obtain real competitive bids in munitions, 
either before or during the war. 

The gradual absorption of competing shipyards by the 
Bethlehem Steel Corp., which at the time of its organization 
in 1904 controlled at least 35% of the shipbuilding capacity 
of the country, brought about a situation after the war where 
the government contracts for new war vessels were not 
awarded competitively, but were parceled out among the 
existing companies on some sort of percentage basis. The 
companies had arrived at an excellent understanding with 
each other regarding war contracts, as the Shearer incident 
showed.* Charles M. Schwab of Bethlehem was in charge 
of the government's shipbuilding program during the war 
at a salary of $i a year. 

The existence of a world-wide armorplate trust was re- 
ported in 1896 by the then Secretary of the Navy Herbert, 
who said: 

There is and has been for some time at the least a friendly 
understanding among armor contractors both in Europe and 
America as to the price to be charged for armor. 19 

This understanding continued until the world war. In 1901 
the Harvey United Steel Co. was organized in England to 
"amalgamate or control four other companies holding the 
* See above, p. 128. 


rights for the Harvey patents for treating steel." This 
company was also the licensor for the Krupp and Charpy 
processes for hardening armor. The Bethlehem Steel Corp. 
held 4,301 shares in the Harvey Steel Co., and big blocks 
of stock were also held by the leading munitions firms of 
seven European nations. The Harvey Steel Co. passed out 
of existence in 191 1. 20 The opinion was then expressed that 
the understanding among the munitions makers was only 
nominally dissolved, and was continuing behind the scenes. 

Price Control in Other Related Industries 

In several industries allied to steel production monopoly is 
maintained effectually, sometimes by the very same interests 
which dominate steel. Thus the two leading producers of 
agricultural machinery are clearly Morgan concerns, while 
Morgan influence is also traceable in the principal firms mak- 
ing locomotives. Price competition has disappeared from 
both these lines of production. In some fields allied to steel, 
however, the existence of monopoly has been traced to steel 

Crucible steel is very closely controlled, over half of the 
production of this product being in the hands of one com- 
pany, the Crucible Steel Co. of America. At the outbreak 
of the war, U. S. Steel controlled almost the whole domestic 
production of ferro-manganese. Several alloy steels are 
produced under non-competitive conditions. When the 
Vanadium-Alloys Steel Co. of Latrobe, Pa., in 1932 acquired 
the capital stock of the Colonial Steel Co. of Pittsburgh, the 
Federal Trade Commission charged that "the effect of such 
acquisition . . . has been and is ... to tend to create a 
monopoly ... in the alloy and other forms of steels." 

Cement may be made from blast furnace slag. U. S. Steel 
doubled its capacity in the cement field by acquisition in 1929 
of the Atlas Portland Cement Co., and is now (1933) the 
leading producer with 13.5% of the country's capacity. It 


is in a position to dominate some local markets. U. S. Steel's 
interest in this rising industry may be explained partly on the 
ground that reenforced concrete was beginning to compete 
successfully with steel in several fields. 

It was charged in the House of Representatives on Janu- 
ary 21, 1928, that U. S. Steel, which operates a large fleet 
of vessels between the United States and the Orient, had 
combined with foreign shipping interests to control the 
transportation of jute burlap from India. 

Combination in Foreign Trade 

The caution shown by U. S. Steel during the period when 
it was under fire probably explains the fact that it did not 
go in with the leading "independents" when these formed 
the Consolidated Steel Corp. in 1919 under the Webb- 
Pomerene Act to develop foreign trade, and also for the 
fact that it failed to rejoin the international rail pool when 
this was reorganized after the war as the European Rail 
Makers' Association. But in June, 1928 (the Consolidated 
Steel Corp. having lasted only three years), the marketing 
subsidiaries of U. S. Steel and Bethlehem came together in 
the Steel Export Association of America, a somewhat looser 
federation than the earlier export combine. 21 

The international steel cartel, formed in 1926, was never 
more than a European organization, and did not even include 
the whole of Europe, since the organizers were unable to 
come to terms with the English. During the crisis following 
1929, competition in the international market increased to 
such an extent that the cartel was dissolved. 

Interlocking and Exchange of Information among 

The "independents" in the steel industry in earlier years 
always emphasized that they were in no way dependent on 
anybody, least of all on U. S. Steel. The heads of Bethlehem 


and of Republic in 1912 glibly assured the Stanley Commit- 
tee investigating the U. S. Steel Corp., that U. S. Steel could 
not put them, the independents, out of business. They got 
away with it. 

Ten years later, when the U. S. Supreme Court had de- 
clared that U. S. Steel was unable to dominate the industry, 
Pres. Eugene G. Grace reversed Bethlehem's testimony and 
admitted to the counsel of the Lockwood Committee in New 
York that the "independents" existed "by the grace of the 
U. S. Steel Corp." He did so with the greatest reluctance. 
All appearance of collusion, especially in the matter of 
prices, between the leader and the followers has been scrupu- 
lously avoided. 

The leading "independents" however have exchanged 
some rather intimate statistics. In 1926 four of them 
Bethlehem, Jones & Laughlin, Republic, and Youngstown 
Sheet & Tube began the publication of comparative accident 
statistics, not only by companies but also by plants and by 
operations. The companies give to their "competitors" in- 
formation which the U. S. Bureau of Labor Statistics is not 
allowed to publish in detail. 

In the hearings on the Youngstown-Bethlehem merger in- 
junction (1930) it was revealed that these same "inde- 
pendents" had been exchanging their cost figures too. In a 
genuinely competitive industry such an exchange would be 

Some of the big steel companies are directly interlocked 
with each other, and with smaller steel companies. Samuel 
Mather, director before his death of U. S. Steel, was also a 
director of Youngstown Sheet & Tube, and as partner of 
Pickands, Mather & Co. was heavily interested in the "in- 
dependent" ore trade. H. G. Dalton, partner of the same 
Samuel Mather, was a director simultaneously of Bethlehem 
and of Youngstown Sheet & Tube, and helped work out the 
terms of the merger that was later enjoined. Dalton was 


also chairman of the $50,000,000 Interlake Iron Corp., a 
vertical merger formed the end of the boom period. 
It included ore and coal properties, and 1,000,000 tons of 
pig iron capacity the largest merchant blast furnace interest 
in the Chicago area. The vice-president of the Wheeling 
Steel Corp. is chairman of the board of the Woodward Iron 
Co. G. M. Humphrey is on the boards of the Republic Steel 
Corp. and the National Steel Corp. 

Trade Associations 

Since prices and competition in the production of steel 
have been effectively regulated without the guidance of a 
trade association, the American Iron and Steel Institute, 
formed in 1909 to collect statistics and hold semi-annual 
meetings, remained until 1932 relatively inactive. In April, 
1932, a reorganization of the Institute was decided on. The 
Institute declared for "more adequate protection against for- 
eign steel," and also for the first time announced a policy 
of attempting to "influence" prices not by "price fixing" 
(oh, no!) but by the "discouragement of admittedly un- 
healthy practices!" The Institute took charge of drawing 
up the employers' "code of fair competition" and of defend- 
ing it before the National Recovery Administration in 1933. 

In the finishing stages of the heavy industry, trade asso- 
ciations have been numerous, and often active in limiting 
competition. The National Association of Flat Rolled Steel 
Manufacturers is a strong organization of independent sheet 
producers. The National Association of Sheet & Tin Plate 
Manufacturers merged early in 1932 with the Hot-Rolled 
Steel Strip and Cold-Rolled Steel Strip Institute. The Iron 
Age pointed out in 1928 that drastic price reductions had 
been "eliminated" in the field of bars, plates, shapes, sheets 
and wires, by formal or informal joint action. Steel interests 
engaged in the manufacture of bolts, nuts and rivets have 
organized the jobbers in the trade and "cooperated" with 


them, with the result that a loss of $12,000,000 in the trade 
in 1924 was changed into a profit of $6,000,000 a year for 
each of the following three years, according to the Iron 

The "Attack" on the Trust 

The founders of the U. S. Steel Corporation of course 
violated the Sherman Anti-Trust Act, but they were not 
much worried by the specter of jail sentences. They had 
too much to say about the way the law was administered. 

Philander C. Knox, former counsel for the Carnegie Steel 
Co. and close friend of U. S. Steel director Henry Clay 
Frick, was U. S. Attorney-General when the company was 
formed. Steel was well represented in high places through- 
out the administrations of Theodore Roosevelt and W. H. 
Taft. Elihu Root, former attorney of the Carnegie Steel 
Co., was Secretary of State under Roosevelt, and was suc- 
ceeded by Knox, while Knox was replaced as Attorney- 
General by George W. Wickersham, formerly attorney of 
the U. S. Steel Corp. Truman Newberry, president of a 
subsidiary of U. S. Steel, was Secretary of the Navy, an 
important post in steel politics. Herbert Satterlee, son-in- 
law of J. P. Morgan, was Assistant Secretary of the Navy. 
Robert Bacon, a partner of J. P. Morgan and a director of 
U. S. Steel, was for a time Secretary of State. Judge Gary 
was confidential adviser to the White House on economic 
matters. 23 His company was investigated several times, be- 
ginning in 1907; but not until 1911 did the trust-busters 
finally force the U. S. Attorney-General to start a dissolu- 
tion suit against U. S. Steel. 

The U. S. Supreme Court in a close decision in 1920 gave 
the combine a coat of judicial whitewash. Any one who 
doubts that the courts consider themselves the guardians of 
vested interests should read this decision. 24 The majority 
judges state that "the many million dollars spent" by the 


corporation, "the developments made, and the enterprises 
undertaken, the investments by the public [read "capital- 
ists"] that have been invited are not to be ignored." They 
freely admit that their decision is influenced by a desire not 
to cause a decline in the foreign trade of the U. S. Steel 
Corporation. They express their earnest wish not to disturb 
existing conditions in the financial world for fear of creating 
a panic. (The country was then near the crest of a specu- 
lative boom the like of which was not seen again until 1927- 
1929.) This decision was signed by the famous liberal judge 
Oliver Wendell Holmes; indeed his concurrence made the 
decision possible. 

Judges, Attorney-General, and steel directors, are mem- 
bers of the same financial oligarchy. In 1930, when the 
Bethlehem- Youngstown merger suit came before the federal 
court in Cleveland, it even happened that all three of the 
judges were disqualified from sitting in the case because 
they held stock in either one or the other of the two steel 
companies involved. 

The Federal Trade Commission, set up in 1914 supposedly 
to serve as a watch-dog over the big corporations, has en- 
gaged in some shadow-boxing with the steel companies. It 
investigated their war costs and profits, tried unsuccessfully 
to get them to render annual reports according to a uniform 
prescribed accounting system, ordered U. S. Steel in 1924 
to "cease and desist" from quoting prices on a "Pittsburgh- 
plus" basis, and attacked the Bethlehem-Lackawanna- 
Cambria merger of 1922. It has not been even an 
annoyance to the steel companies. 

For two decades after 1901 the steel industry made ad- 
vances in productive efficiency chiefly by applying known 
ideas on an increasing scale. Sweeping new inventions were 
not encouraged by the big bankers. In fact, the bankers 
have sabotaged engineering efficiency. Fundamental research 


has been neglected. As Edwin C. Eckel, mining engineer, 
points out, 

A new process means writing off a part of your fixed capital, 
and scrapping existing plant. If you have no competition, there 
is no reason why you should accept this certain loss. 25 

Badly located and antiquated mills have been kept in opera- 
tion for reasons of business strategy. Cross-hauls are so 
numerous that they cease to cause comment. According to 

The perfect industry of your making would differ in many 
important respects from the existing one. Furnaces and mills 
would be redistributed. The ratio of capacity to requirements 
would be corrected not only in geographical areas but in the 
country as a whole. Iron-making, steel-making, and finishing 
capacities would be brought into proper balance. Dozens of 
existing sites of blast furnaces, steel works and mills would be 
abandoned and certain new ones established. Most of the obso- 
lescence in equipment would be wiped out. Excessive provisions 
for future requirements in certain raw materials would be cor- 
rected. The capital structure would be revised. 26 

The realization of a planned organization such as the writer 
of the above passage envisions is impossible under capitalism. 
The primary purpose of capitalist industry still remains not 
engineering efficiency nor the creation of use-values, but the 
creation of profit for the owners. All planning is sub- 
ordinate to this end; and as long as monopoly increases 
profits, planning will be directed to the creation of monopoly 
with all its waste and deliberate sabotage. How the finance 
capitalists have realized gigantic returns out of steel will 
be shown in the next chapter. 


IN this chapter we shall attempt to analyze the profits of 
the leading steel companies in such a way as to bring out the 
true extent of the unearned income which has been piled up 
by workers for owners. We shall also try to describe some 
of the methods used by the owners in accumulating their 

Analysing Company Profits 

All of the big steel companies now publish annual reports 
which, while incomplete in some important respects, give 
figures on dividends and capital investment which may be 
used for purposes such as ours. Most of the persons who 
analyze these reports do so in order to give advice to capi- 
talists specifically, to the investor or speculator who wants 
to know whether to buy or sell the securities of particular 
companies. Therefore profits are usually calculated as a 
percentage return on the total investment. 

For our purposes such an analysis tells only half the 
story. We want to know not only what the capitalist may 
expect to make who puts his money into a concern to-day, 
but what the capitalist made who put his money into a con- 
cern some years ago. We shall talk in terms of the original 
investor or speculator, and shall endeavor to show what 
return he has made in the period since he put his money into 
the business, supposing him to have held onto his securities 
and to stock issued subsequently in the form of stock divi- 

A very large proportion of the net earnings of a steel 



company, on the average about one-third, are kept in the 
business year in and year out. They appear on the balance- 
sheet as surplus, or undivided profits. The United States 
Steel Corp. left in the business from April i, 1901, to De- 
cember 31, 1931, the staggering sum of $1,403,460,692, the 
sum being distributed in the balance sheet over a number of 
accounts. Thus "appropriated surplus," "unappropriated 
surplus," "common stock issued as dividend in 1927, and 
deducted from surplus at that time," and money set aside out 
of earnings "to amortize the cost to U. S. Steel of stocks of 
subsidiary companies in excess of their investment in tangible 
property" in plain English, to put real values behind the 
fictitious (par) value of the original common stock are all 
surplus accounts. The value of the capital investment in 
the heavy iron and steel industry in 1928 has been estimated 
at between four-and-one-half and five billion dollars. On 
this enormous sum the financiers expect a "return" to be paid. 
The workers slaved in the mills in order that U. S. Steel 
common stock, admittedly backed by no tangible value when 
issued, should become "the premier industrial security in the 
United States," and rise from a low of $8.38 per share in 
1905 to a high of $366.45 in 1929.* 

We shall treat capital which is accumulated and not paid 
out to security-holders as an investment of the business itself, 
to which workers and customers are indispensable no less 
than the capital originally put in. This capital, remaining 
in the business as surplus or undivided profits, is legally the 
property of the stockholders, and has to be added to the 
other forms of profit in order to arrive at the total return 
that the security-holders have made.** 

* The actual high for one share of U. S. Steel stock was $261.75. 
However in 1927 there had been a stock dividend of 40%, so that in 
terms of 1905 stock the price was equivalent to $366.45. 

**The analysis on which this and the next two sections are based 
was made by Kalmun Hecht from company reports. For method and 
definitions see Appendix XI. 


Our analysis shows that in the period 1905-1931 inclusive 
the profit, including profits left in the business, for companies 
which in 1931 controlled 61% of the ingot capacity and in 
previous years have controlled well over 70%, was at the 
annual average rate of 14.3%, or almost exactly one-seventh. 
The average cash return to holders of securities was at the 
rate of 9.26% per year on the investment, or about one- 
eleventh. The rate of profit in the whole industry is no 
doubt fairly indicated by this very large sample. In other 
words, the owners of some billions of dollars' worth of 
securities have got from the industry every eleven years a 
sum equal to the amount originally put in, without using 
up the original capital at all, while huge equities piled up in 
the business were causing their whole capital to be repro- 
duced for them once every seven years. In these companies 
alone U. S. Steel, Bethlehem Steel, Inland Steel, and 
Youngstown Sheet & Tube the cash paid to security-holders 
in the 26-year period has been in round numbers $2,950,000,- 
ooo ; and a further $1,600,000,000 stood to the credit of 
the stockholders at the end of 1931, not counting the value 
of the original real investment which has presumably been 

These companies employed at the peak of operations in 
1929-1930 a total of 304,000 workers. The book surplus on 
hand December 31, 1931, was therefore the equivalent of 
$5,623 per worker. For the U. S. Steel Corp. alone, the 
total earnings of the company in the period 1901-1931 in- 
clusive, not including money used to pay off and retire bonded 
indebtedness, have been equivalent to $621.20 per employee 
(wage-earners and salaried workers both included) per year, 
or about twelve dollars per employee per week. The returns 
to U. S. Steel security-holders have been at the rate of 
$19,138 ($12,436 in cash, the rest in equities) for every 
worker steadily employed on the average over the 31 -year 
period. Fon every dollar paid out by the company in wages 


and salaries from its formation to the end of 1931, security- 
holders have been credited with 46J40, of which 300 has been 
paid to them in cash. For this return they as security- 
holders have of course rendered no service whatever aside 
from the act of making the investment. 

Total payments by the steel companies to capitalists include 
not only dividends and interest but royalties (lumped with 
"expenses") and interest on short-term indebtedness. Taxes 
go to support a government which works more or less openly 
for the owners of industry; and taxes paid to the federal 
government alone by U. S. Steel in the period 1901-31 ag- 
gregated over a billion dollars net, i.e., after the company had 
received back $96,000,000 in refunds. Our calculations on 
rates of return include only profits in the narrow sense, not 
total return to capitalists. 

The Inland Steel Co., a Chicago concern which was 
founded in 1893 an d f r many years was enabled to sell 
practically its whole products at inflated prices owing to the 
operations of "Pittsburgh-plus," has been the most profitable 
of the four companies. From 1905 through 1931 it paid in 
cash to security-holders over $65,000,000 on a real average 
investment of $22,000,000, or at the rate of 11.396 per year. 
The surplus remaining at the end of 1931 was over fifty-three 
millions, and the real earnings, including surplus, on the real 
investment were at the rate of more than 20% per year. 

Youngstown Sheet & Tube was not far behind. Its real 
earnings in 1905-31 averaged 19.9% on the real investment, 
and 10.5% per year on the average real investment was paid 
in cash. From 1901 to 1922 the earnings were at the rate 
of 32.4% per year on the real investment. This company 
started with a capital of $1,000,000 in 1901, and building up 
largely through reinvestment of earnings had accumulated 
by the end of 1931 a surplus of $107,000,000. 

U. S. Steel's rate of earnings in the period 1905-31 was 
on the average 15.3% on the real investment, cash payments 


accounting for 9.9% and surplus for the balance. For the 
period 1901-1931 inclusive the earnings on the real invest- 
ment averaged 17.22% per year. Unappropriated surplus 
as of December 31, 1931, amounted to $421,837,192, accord- 
ing to the company's balance sheet. Total earnings left in 
the business amounted, as already stated, to $1,403,460,692. 
Bethlehem's record cannot be satisfactorily traced. Its 
finances have never been fully investigated by a competent 
outside agency. On the record, its rate of earnings on real 
investment average in the period 1905-31 inclusive 8.9%, 
of which 6.5% was paid out in cash. Surplus standing to the 
credit of stockholders on December 31, 1931, amounted to 

Other Profitable Concerns 

The above computations refer only to the big companies. 
Comparisons according to the usual methods of capitalist in- 
vestors show that small companies are quite as profitable as 
large; in fact, the rate of profit on the "investment" is so 
similar for different sizes as to be surprising. 1 The small 
companies vary more among themselves than the large, but 
they average about the same rate. Competition keeping 
profits down to moderate levels would ordinarily be expected, 
if at all, among companies in fields where no one company 
overshadows the others, as for example in the production of 
tinplate. U. S. Steel produces only three-eighths of the coun- 
try's tinplate.* Yet prices have been high enough to bring 
big gains to the leading "independent" in the field, namely the 
McKeesport Tin Plate Co., which incidentally is notorious for 
the bad working conditions in its plant. 

Suppose a capitalist to have purchased 120 shares of the 
stock of this company in 1914 for $12,000, and to have kept 
all the stock that was issued to him in the form of stock 

*For further details on all four companies see Appendix XI. 
* Average of years 1927-1931 inclusive. 


dividends. By the end of 1931 he would have received 
$43,146 in cash (20% per year on his investment) and would 
have had equities standing to his credit on the books which, 
combined with his cash dividends, would have made an an- 
nual average return of 67.1%. 

The Crucible Steel Co. of America is a little industrial 
trust. It controls between one-half and three-quarters of 
the output of the so-called crucible steel, most of which is 
now made in electric furnaces. This company was formed in 
1900. It put out $25,000,000 of common stock, which was. 
all water. Up to December 31, 1931, it paid in cash to- 
security-holders, $92,711,039, or an average of 10.1% per 
year on the real investment. In addition it piled up a surplus 
of $52,000,000. The earnings on real investment were at the 
average rate of 15.8% per year. Thus the company has been? 
only slightly less profitable than U. S. Steel. 

Many other examples could be cited if space permitted. 
Thus, it could be shown that the Sloss- Sheffield Steel & Iron 
Co.'s rate of profit on real investment over the lo-year period,, 
1922-1931, which has amounted to 16% per year, is nearly 
twice the average rate on the nominal investment (8.4%). 
Unfortunately, the analysis cannot be extended to the whole- 
industry, but must close with the reminder that not all com- 
panies have made exceptional profits. A few of the smaller 
"independents'* have done only moderately well such as the 
Pittsburgh Steel Co., which in the 26-year period has made 
an average profit on the real investment of "only" 8.4% 
and some of the small companies have been squeezed out 

Post-War Profits 

The decade 1922-1931 has been a profitable decade for the 
big steel companies. In spite of increasing competition, the 
rate of earnings dropped only a little below the average for 
the 26-year period. As we calculate them, earnings on the 


real investment (which, it must be recalled, is not the same 
as total investment) have been actually higher for U. S. 
Steel in this decade than in the 26-year period of 1905-31 as 
a whole. 

The records of the Jones & Laughlin Steel Corp. are avail- 
able from 1922 on, and this company, the fourth largest 
producer, has accordingly been included in the analysis for 
the post-war period. It has done better by its "original in- 
vestors" than even the Inland Steel Co. It reorganized in 
1922, and capitalized a large part of its surplus without 
drawing in new capital to any great extent. Counting this 
capitalized surplus as only a part of earnings of previous 
years, and considering the par value of the remaining securi- 
ties to represent the real investment, we find that in the 
decade 1922-31 inclusive the average return on the real invest- 
ment was at the rate of 25.9% per year, as compared with 
Inland's 14% return in the same decade. 

Five of the seven largest producers and 66% of the coun- 
try's ingot capacity have been included in the post-war 
analysis. Of the two large companies which were omitted 
perforce, one National Steel Corp. has been more profit- 
able than the average, and the other Republic Steel Corp. 
has been less profitable. The post-war analysis gives for 
its period an even better indication of rates of profit in the 
industry as a whole than the 27-year analysis above gives for 
the long span. 

The five companies paid out to security-holders in cash 
during the decade the sum of $1,314,000,000, and added 
$547,000,000 to surplus. The total earnings amounted to 
13.4% per year on the average real investment. 

This analysis, we repeat, is based on the public statements 
of the companies. It is not exhaustive, because the com- 
panies do not publish exhaustive reports. Even U. S. Steel, 
which had the shadow of anti-trust prosecution hanging over 
it from its inception and has therefore published fuller re- 


ports than most companies, has never itemized some 6% 
billion dollars of its expenses, or 26.4% of its total receipts 
from sales to the end of 1931. 

Dividends in the Crisis 

The surplus of the steel companies constitutes a reserve for 
bad times a sort of unemployment insurance, wrote Ida M. 
Tarbell, the biographer of E. H. Gary, in 1927. Her state- 
ment was correct. Only she did not state that it was the 
return to capital, not to labor, which was insured for bad 

The steel industry made a net operating loss for 1932 of 
about $150,000,000, estimated Robert P. Lamont, former presi- 
dent of the American Iron and Steel Institute. Dividends on 
common stock were "earned" only by a few companies which 
specialized in finished products, such as the National Steel 
Corp. and the McKeesport Tin Plate Co. Yet not only did 
all the important steel companies pay interest on their bonds 
right through 1932 companies with four-fifths of the ingot 
capacity paid some dividends as well.* Certain companies, 
including U. S. Steel, continued dividend payments on stock 
that was originally all water, at a time when their employees 
were undergoing slow starvation and keeping their children 
home from school for lack of clothes. 

A compilation has been made to bring out the facts of divi- 
dend policy in the crisis. Companies with 65.3% of the 
capacity studied paid some dividends to all their stockholders, 
including common stockholders, in both 1931 and 1932. 
Companies having 16.3% of the capacity paid dividends on 
preferred and common stock in 1931 and on preferred in 
1932. These two groups cover four-fifths (Si.6%) of the 

*The Colorado Fuel & Iron Co. defaulted payment of $800,000 
due on its bonds and went into receivership at the. end of July, 1933. 
As is usual in business failures, the president of the company was 
appointed receiver. 


included capacity. Companies having $.1% of the capacity 
paid either (a) preferred dividend in 1931 and 1932 or (b) 
dividend on both preferred and common in 1931. Companies 
with 4.1% of the capacity paid dividends on preferred stock 
in 1931 and no other dividends in the two years. The only 
important iron and steel companies which paid no dividends 
at all in either of the two years were the Republic Steel Corp., 
the Keystone Steel & Wire Co., and the Ludlum Steel Co., 
controlling between them 9.2% of the capacity for which cal- 
culations have been made, and also two companies which do 
not make raw steel, the Sloss- Sheffield Steel & Iron Co. 
which produces only iron and the Eastern Rolling Mills, a 
finishing concern. 

It is probable that the above calculations, covering as they 
do nearly 84% of the country's ingot capacity, reflect the 
dividend policy of the industry as a whole. But the fact that 
dividends continued after wages had been cut and long after 
mass layoffs had begun is not the whole story. Salaries con- 
tinue for the big bosses even when there is little or nothing 
for them to do. Management, ownership, and finance extract 
the money from steel, in bad times as in good. From the 
surpluses piled up in good times, the workers receive in bad 
times no protection at all. 


Figures on the earnings of the steel companies do not 
include the sums paid as royalties to the owners of ore and 
coal lands, for these payments are an expense to the com- 
panies. Royalties on iron ore amounted to between twenty 
and twenty-five million dollars in 1929, the equivalent of 
approximately 30 cents on every ton of iron ore and 50 cents 
on every ton of pig iron produced in the United States. In 
1919, royalties on iron ore in the country as a whole amounted 
to 410 per ton of ore, or 11.5% of value of the ore. 2 Royal- 
ties paid by steel companies on coal cannot be estimated, but 


it was stated in 1913 that the royalty paid by the U. S. Steel 
Corporation on one 2,ooo-acre coal property near Uniontown 
amounted to $250,000 a year, or 25 cents on every ton of coal 
produced. 3 

Royalties are unearned income of the purest sort. In 
some instances the families owning the land underneath which 
iron ore was discovered, had already taken out of the terri- 
tory a fortune in extinguishing the game and another fortune 
in removing the timber. 

In the sections that follow, the rates of profit given are 
calculated in the way that is usual to accountants for busi- 
ness firms. These rates are therefore not to be compared 
with those contained in the previous sections of this chapter. 

War Profits 

There is plenty of profit in the armament trade even in 
time of peace. The Bethlehem Iron Co. (as it then was) 
began making armaments in 1887. "The Bethlehem's own 
figures show," wrote the Secretary of the Navy nine years 
later, "that up to November, 1896, its profits paid for this 
plant in full, . . . paid 10% on its cash investment, and left 
a surplus of $672,000." The Carnegie Co. started making 
armor plate three years after Bethlehem. The Secretary of 
the Navy stated that it had managed to amortize the whole 
cost of its plant by 1896 while paying 10% regularly on the 
money it claimed to have invested. 4 This secretary (Herbert) 
evidently knew a good thing when he saw it. On quitting 
office he became counsel for the Carnegie interests. 

War abroad with the home government neutral is the ideal 
situation for armament firms, according to Ralph Humphreys 
Stimson, student of the armament question. 5 Operating net 
earnings of the Bethlehem Steel Corp. for 1916 were 13 
times its net earnings for 1911. In the same year, U. S. Steel 
made 363% of its 1911 net earnings. Bethlehem made $38,- 


200,000 more and U. S. Steel $247,000,000 more in 1916 
than in 1914. 

Bull speculators in steel stocks made killing after killing 
in 1915 and 1916. Before the war, the price of common 
shares of the Bethlehem Steel Corp. fluctuated around $40. 
At the end of October, 1915, the same shares sold as high 
as $500. The increase during 1915 in the value of the securi- 
ties of corporations filling war orders from the United States 
government, has been estimated at over $850,000,000. 

A war in which the home government participates is bet- 
ter than peace in piling up profits for the steel companies. 
U. S. Steel's profits on its nominal "investment" (par value 
of securities plus surplus far higher than real investment) 
as it existed at the beginning of the war amounted to 21% 
in 1916, iS% in 1917, and 12^ % in 1918, after payment 
of federal taxes. Ninety-one "independent" steel companies 
studied by the Federal Trade Commission showed aggregate 
profits during 1915 equivalent to 9.4% on the pre-war total 
balance-sheet value of stocks, bonds and surpluses. Net 
earnings, after taxes, on the same total, amounted to 33.6% 
in 1916, 42.1% in 1917, and 23.1% in I9i8. 6 The profits of 
these four years were greater than the whole amount invested 
in the companies before the war, even counting watered stock 
at full (par) value. U. S. Steel did not specialize on muni- 
tion-making and was prevented, like other companies, from 
setting its own prices during part of the time that the United 
States was at war; but on its war contracts it is stated to 
have realized a 50% profit. This statement was made by 
counsel for the Bethlehem Steel Corp., which, he said, made 
a profit of only (!) 21% on its war-time shipbuilding con- 
tracts. But Bethlehem made a straight 100% profit on many 
government war orders which its management knew could 
not be placed elsewhere. 

Some of the steel companies which were selling at the 
fixed price set by the government got restless at the fat 


profits going to other companies. The government had 
grouped the companies into different classes, and it was class 
3 that made objection against the government prices as being 
too low. The Federal Trade Commission examined their 
books and found that the profits of ten of them on their 
nominal investment were as follows in 1917 : T 


Alan Wood, Iron & Steel Co 52.63 

American Tube & Stamping Co 40.03 

Eastern Steel Co 30-24 

Follansbee Bros. Co 1 12.48 

West Penn Steel Co. 159.01 

Allegheny Steel Co 78.92 

Central Iron & Steel Co 71-35 

Forged Steel Wheel Co 105.40 

Nagle Steel Co 319.67 

West Leechburg Steel Co 109.05 

Forty-nine leading heavy-industry producers, including 
U. S. Steel, added approximately $689,000,000 to their sur- 
plus accounts between the end of 1915 and the end of 1918. 

The share of the American armament firms in the profits 
of the World War are indicated, says the British Union of 
Democratic Control, in the approximate value of the con- 
tracts which were placed by J. P. Morgan & Co. According 
to the history of the Ministry of Munitions this value amounted 
to $2,063,350,000 during the period I9i4-i8. 8 

No wonder the steel industrialists "cooperate" cordially 
with the government's plans, as described before the War 
Policies Commission in 1930, to keep the industry always 
ready for diversion from a peace-time to a war-time basis. 

Frauds in the Armament Trade 

The armament makers have not been content with cashing 
in on their monopoly profits. They have cheated the govern- 
ment year after year. 


Charles M. Schwab has often been caught at this game. 
Four men who had scabbed on the Homestead strike in 1892 
brought to the Navy Department in the following year evi- 
dence that the Carnegie Steel Co. had been violating its con- 
tracts for the manufacture of armor-plate. Investigation 
showed that blow-holes had been plugged, and that plates 
selected by government inspectors for testing had been re- 
treated after their selection. Schwab, who was superintend- 
ent of the plant at the time, admitted in a letter that he had 
authorized things which were specifically forbidden in the 
contract. The company paid a fine of $I4O,484.94. 9 Schwab 
had been caught cheating the government. Did he lose caste 
with the business community ? Not at all ! He and his im- 
mediate superior at the time, W. E. Corey, were afterwards 
made the first and second presidents, respectively, of the 
world's largest corporation at the time, U. S. Steel. 

Schwab joined Bethlehem Steel in 1904, and this company 
perpetrated frauds on the government in its armament con- 
tracts right up to the outbreak of the world war, according to 
affidavits collected by Rep. Henry T. Rainey of Illinois. 10 

Schwab, who wept on the witness stand after the war be- 
cause his patriotism had been questioned, engaged in an 
underground piece of business in 1915-1916 which would 
have caused his government "great embarrassment" if the 
transaction had been disclosed at the time. The British gov- 
ernment approached Schwab to get him to build submarines, 
but the United States was still officially neutral and Schwab 
was forbidden to build them in America. Did he observe 
American neutrality? He did not! 

He bought Vickers' shipyard in Montreal, manufactured the 
parts of the submarines in the United States, sent them to 
Canada as parts of motor-cars, assembled them in the shipyard 
and delivered them within five months after the placing of the 
order. 11 


Who Gets the Money? 

Graft payments, commissions to bankers and others, and 
all salaries of high officials, are entered as part of "expenses." 
The total of such "expenses" may be enormous; but the 
public and even the stockholders are not informed of the 

The Bethlehem Steel Corp. has never rendered a detailed 
accounting of some $11,000,000 paid it by the government, 
on contracts with the U. S. Shipping Board. A suit for an 
accounting was still pending in 1932, and is no doubt still 
pending. Charles M. Schwab, who was director-general of 
the Emergency Fleet Corp. from March to December, 1918, 
at the same time that he continued to be the largest shipyard 
owner in the country, drew out $260,000 during this period 
for "personal expenses." The money has never been ac- 
counted for in detail. 

Navy contracts are usually let on a basis of "cost plus a 
reasonable profit." This system leads directly to padding of 
payroll records and expense accounts. Of the "cost-plus" 
system, under which Bethlehem built most of its ships for 
the government, Homer L. Ferguson (who himself had 
received many such orders) said in 1931, "Cost plus I think 
is very bad. It is simply an invitation to the management 
and everybody else to be happy at the expense of the pur- 
chaser," 12 in the case of war contracts, at the expense of 
the government. 

The ethics of the looting gang require that a thief shall 
play square with his pals. So Carnegie was much annoyed 
when he found that H. C. Frick was trying to sell for 
$1,500,000 to the Carnegie Co., Ltd., of which Frick was 
chairman, a farm for which Frick had paid $5OO,ooo. 13 Some- 
what later, Schwab told the board of directors of U. S. Steel 
that he thought he was the only one on the board who didn't 
have something to sell the corporation. 


High salaries became associated in the public mind with 
the steel industry in the days when mass production methods 
were first applied to steel-making, at the Edgar Thomson 
plant of the Carnegie interests in Braddock. Andrew Car- 
negie paid Capt. William Jones, superintendent of the Brad- 
dock plant, $100,000 a year. 14 The largest salary in the busi- 
ness world is still reported to be paid to a steel executive 
George Gordon Crawford, president of the Jones & Laughlin 
Steel Corp. The journalist John T. Flynn says that Mr. 
Crawford joined the company on a three-year contract call- 
ing for $350,000 a year. 15 Mr. Crawford denies the state- 
ment, but will not tell his stockholders what he is getting. 
Charles M. Schwab, chairman of Bethlehem Steel, says that 
after much urging from the board of directors he reluctantly 
agreed to accept a salary of $150,000 a year. The President 
of the U. S. Steel Corp. was formerly paid $100,000 a year. 
When Judge Gary assumed the position of chairman and 
chief executive officer, his salary was gradually increased 
until he was getting $250,000. The Bethlehem Steel Corp. 
has a bonus system, established in 1911 and revised in 1917. 
The most expert analyst could not have learned from the 
published reports of the Bethlehem Steel Corp. that 21 direc- 
tors and officers received between 1917 and 1930 over $38,- 
000,000 in bonuses, including a bonus of $1,623,753 paid to 
Pres. Grace in the year 1929 alone. The facts came out in 
the Youngstown-Bethlehem merger suit, and the bonus plan 
was hastily revised under pressure from irate stockholders. 
U. S. Steel has a bonus system; and under its operation the 
executive officers and others received $3,112,168 in 1930, or 
about the same amount that was paid in that year by Bethle- 
hem under its revised bonus plan. 

Directors of steel companies often get as much for an 
afternoon spent in attending a directors* meeting as a worker 
makes in four weeks at full time. This compensation is in 


addition to their regular salaries. In 1932 directors of U. S. 
Steel were getting $100 a meeting. 

Apologists for capitalism such as Professor F. W. Taussig 
of Harvard University tell us that huge salaries are "neces- 
sary" in order to induce the highly competent captains of 
industry to put their best effort into their work. However, 
the elder J. P. Morgan was quoted as saying, "The trouble 
with the United States Steel Corporation is to find a presi- 
dent of ability who does not need all his time to spend his 
salary properly." 16 

In general, investment bankers who have arranged mergers 
of steel companies and the officials of the companies involved 
in mergers, have all "got theirs." For their services in finan- 
cing the Trumbull Steel Co., which in the end was merged 
with Republic Iron & Steel, Cyrus S. Eaton's firm of Otis 
& Co. took a commission of $1,280,000, plus an option to buy 
stock on which it realized $300,0x30 more. For underwriting 
the preferred stock of the Republic Steel Corp., Otis & Co. 
received $1,386,641. It got 12,500 shares of the stock of 
Central Alloy Steel (one of the companies merged) for an 
underwriting operation for that company. In addition it had 
the option to purchase 200,000 shares of the common stock. 17 
It is not always clear where the money comes from for these 
commissions, but two stockholders of Republic Steel have 
charged that Otis & Co. acting as clients for the Trumbull- 
Cliffs Furnace Co. engineered a trade of stock between 
Trumbull-Cliffs and the Republic Iron & Steel Co., in which 
the latter company lost the equivalent of $1,700,000. It is 
estimated that bankers pocketed $100,000,000 as a result of 
steel mergers which preceded the forming of U. S. Steel. 
This total is exclusive of the Morgan firm's commission for 
forming U. S. Steel, which amounted to $62,500,000. 


Fleecing the Little Gamblers 

The directors of a big steel company are in a fine position 
to get rich at the expense of the small stock-market specu- 
lator, because the directors have inside information as to what 
is going to happen. In most companies, it is customary for 
them to use this information to buy and sell the stock of their 
own company for profit, which is like gambling with loaded 
dice. Gary made a great show of breaking up this practice 
in U. S. Steel ; he used to boast that the figures on quarterly 
earnings of his company were given to the public at the 
same time they were given to the board of directors. But 
stocks of U. S. Steel still have a way of reacting in advance 
when the directors contemplate an important step. For ex- 
ample, the stock market thinks that a wage cut by U. S. Steel 
increases the earning power of U. S. Steel stock; and when 
the directors of the company were about to announce a 15% 
wage reduction for all employees in May, 1932, its stocks took 
a bound upward. The Wall Street Journal suggested that 
"boy friends of house-maids in the homes of Steel Corpora- 
tion directors may have had premonitions of the wage cut and 
acted marketwise." 

When a company buys and sells its own stock, even Wall 
Street takes notice. From 1923 to 1926, the Crucible Steel 
Co. of America, of which Horace S. Wilkinson is chairman 
and chief stockholder, bought on the market 100,000 shares 
of its own common stock, with a par value of $10,000,000. 
On April 22, 1926, Chairman Wilkinson issued a statement 
saying, "It is not now, nor has it been, the policy of the com- 
pany to buy and sell or speculate in its shares." At the end 
of 1929 the company spent $2,676,000 in new purchases of 
its own stock. 

J. P. Morgan and his associates who floated U. S. Steel 
used in 1901 a kind of trickery that is considered dirty even 


in Wall Street. They hired a professional manipulator to 
"wash" sales. Let Alexander Dana Noyes tell the story : 

On the Stock Exchange, a celebrated manipulator of specula- 
tive values was employed, when the shares were listed, to create 
a semblance of great investment activity, and to sustain the price. 
The project met with remarkable success. Starting on the curb 
at a price of 38 for "Steel common" and 82^ for the 7% "Steel 
preferred," the Stock Exchange price advanced in a month to 
55 and 101% respectively. Half a million of the shares were 
dealt in during the first two days of their appearance on the 
Stock Exchange; the next week's record was a million. The 
greater part of this was doubtless merely "matching of orders" 
by the syndicate's agent; but the public did not know this. 18 

Some Fortunes from Steel 

Many individuals have taken fortunes from the steel indus- 
try. Charles M. Schwab, who received $5,000,000 for help- 
ing Carnegie to fight Frick, and who in 1920 was spending 
some $50,000 per month on himself and his family (C. W. 
Barren's estimate), stated that the Carnegie steel interests 
alone produced 50 or 60 millionaires, and not all of these 
fortunes came from simple reinvestment of dividends and 
interest. Many steel fortunes were accumulated by illegal 
methods. Alexander Peacock, steel millionaire, got his start 
by bribing Tammany boss Croker, it is broadly intimated by 
the Wall Street Journal. John W. Gates, one of the original 
steel promoters, got rich by violating patents in barbed wire. 19 

Lavish spending has failed to dissipate the piles of the 
leading speculators and monopolists. Many have tried to 
hold their fortunes together even after their death, and have 
tied the money up in trust funds, so that their immediate 
heirs are not legally able to touch the principal. 

Samuel Mather, Cleveland ore and steel magnate, and 
director of U. S. Steel, left more than $100,000,000 at his 
death in 1931. Elbert H. Gary lived in a house which was 
sold after his death for over $400,000; his total estate 


amounted to $22,500,000. Frederick R. Wickwire was a 
steel capitalist of whom most men have never even heard; 
yet owing to the fact that he belonged to the family which 
founded the Wickwire- Spencer Steel Corp., he had between 
three and four million dollars to his credit when he died in 
1929. Norman B. Ream, one of the less known founders 
of U. S. Steel, and long a director, left $40,000,000 on his 
death in 1915. H. C. Frick, who directed the smashing of 
the Homestead strike, lived in a home appraised at over 
$3,000,000. He left an estate of $50,000,000. Frick's big 
boss, Andrew Carnegie, gave away $350,000,000 during his 
life. His will in 1919 specifically disposed of a net estate of 
$23,000,000; however, no schedule of the whole estate was 
filed. The dynasty had already been founded before Car- 
negie's death. His sister-in-law, Mrs. Lucy Carnegie, who 
died in 1916, left $i5,ooo,ooo. 20 Henry Phipps, a former 
partner of Carnegie who was long supposed to be one of the 
country's richest men, appears to have passed along most of 
his fortune during his long life. He left an estate of only 
( !) $3,000,000 in 1930. 

The various foundations endowed by Carnegie received 
mainly U. S. Steel bonds as their endowment, so that many 
doctors, professors, librarians, other professional workers 
and preachers have had a direct financial interest in keeping 
the profits rolling in to the trust. 

So smoothly does the system pour money into the pockets 
of the owners that some of them have come to look on capi- 
talism as a creation of God. Inveighing against those who 
would change the system, Myron C. Taylor, who has been 
delegated by the House of Morgan to run U. S. Steel, said, 
"To tear down these facilities and supplant them with some- 
thing of the unknown quality which has no particular virtue 
to recommend it would be a crime against the Creator and 
the faculties which He inspired to produce these benefits." 


So far, this book has been in effect a rehearsal of what 
the employers have done in steel. We have studied their 
policy on safety and diseases, the wage rates which they have 
set, the schedules of hours and production which they have 
enforced, and the types of "welfare" which they have seen 
fit to introduce; and we have also examined their business 
organization and the profits which they have taken out of 
the industry. We turn now to the workers' efforts at organiza- 
tion for winning power in the industry. 

From its foundation in 1875 until 1892, the Amalgamated 
Association of Iron and Steel Workers was known as the 
strongest union in the United States. In 1932 it was one 
of the weakest, including in its membership less than i% 
of the workers in iron and steel. Since other unions fol- 
lowing the same policy and based on the same principles as 
the Amalgamated Association have made equally little head- 
way in penetrating large-scale, trustified industry, the story 
of this union is of unusual interest and importance. 

Early History 

The American steel workers have a tradition of struggle 
which goes back more than eighty years. In 1849 tne P u d- 
dlers of Pittsburgh which was already the center of the 
heavy industry in the Midwest staged a strike lasting from 
December until the following May. 1 It was the puddlers 
also who in 1859 formed the United Sons of Vulcan at 
first as a secret organization, but later emerging into the 
open to set up a national organization in 1862. 



The organization reflected at its origin the conservative > 
narrow spirit of the men who founded it, which however 
was not different from that of the typical craft union of the 
day. The union's purposes were 

the elevation of the position of its members, the maintenance of 
the best interests of the craft, the relief of the sick and dis- 
tressed members, and all other things appertaining to the busi- 
ness in which the members under its jurisdiction may be 
involved. 2 

When the rollers and heaters set up their union (the 
Associated Brotherhood of Iron and Steel Heaters, organ- 
ized nationally at Chicago in 1872), the roll hands, semi- 
skilled men working around the rolls, set up their own Roll 
Hands' Union (National Union of Iron and Steel Roll 
Hands of the United States) as a protest against the exclu- 
siveness of the rollers. 3 After the crisis of 1873 tne senti- 
ment for amalgamation among the various iron and steel 
unions grew rapidly. The Amalgamated Association of 
Iron and Steel Workers was formed at Pittsburgh in 
August, 1876, including the three unions already mentioned. 
A local of nailers was also admitted. The puddlers did not 
wish to admit their helpers but were obliged to do so be- 
cause the rollers' helpers were in. 

During the first decade of the new union's existence there 
was a growing sentiment in favor of admitting the unskilled 
to membership as well. This sentiment was tremendously 
increased by the success of the Knights of Labor, an or- 
ganization which became for a time the leading labor organ- 
ization in the country. It admitted to membership all types 
of workers and even some non-wage-earners, though its 
constitution provided that at least three-quarters of the 
membership of any local body should be wage- workers or 
farmers. Unskilled and semi-skilled were welcome, and as 






S i 

H Si 

S 5 

flj P< 


In this new sheet-rolling- process the sheet is automatically passed through 

each pair of rolls. 


they joined in increasing numbers the organization became 
in spite of its leaders a militant body. 

Beginning in 1873, the Knights established locals in a 
considerable number of iron and steel plants, including sev- 
eral in Allegheny County. T. V. Powderly, Grand Master 
Workman of the Knights of Labor, visited the convention 
of the Amalgamated Association in 1886, at the height of 
his power, and invited it to affiliate on a basis that would 
guarantee it complete autonomy. The convention referred 
the matter to the lodges, which voted it down. The Knights 
contested the leadership of the Amalgamated Association at 
Scottsdale and Braddock, Pa., in 1886, and at Mingo Junc- 
tion, Ohio, in 1887; but the Mingo Junction incident re- 
sulted disastrously for the Knights. The next year they 
formed the "National Trade District 217, Iron, Steel and 
Blast Furnacemen"; but it came to nothing. 

It is said that the influence of the Knights at Braddock, 
where they at one time held a key position, forced the Amal- 
gamated Association lodge in the Carnegie mill there (the 
Edgar Thomson works) to take in all workers in and around 
the mill. This policy would not have been opposed by Wil- 
liam Martin, general secretary of the Amalgamated Asso- 
ciation, who was a believer in industrial unionism. However, 
the Knights declined after 1886, and the Amalgamated 
Association has remained to this day a sort of amalgamation 
of craft locals, whose craft consciousness has led to fre- 
quent bickerings and occasional secessions.* 

The Homestead Strike of 1892 

The Amalgamated Association was a skilled workers' 
union ; but furthermore, it was an iron workers' union. The 

*The nailers withdrew soon after the amalgamation, and came 
back only several years later. The heaters left the union just after 
the start of the Homestead strike of 1892, and the puddlers were out 
for the better part of the following two decades. 


union's orientation on iron rather than on the rapidly-rising 
steel industry accounts for the fact that its organizing cam- 
paigns in the important Edgar Thomson steel works during 
the eighteen-eighties were desultory and in the end ineffec- 
tive. Out of the three mass-production steel plants in the 
Pittsburgh area in 1891 those at Braddock, Duquesne, and 
Homestead, all controlled by the Carnegie interests only 
one, at Homestead, was organized, and that imperfectly. 
The great National Tube Co. plant at McKeesport was also 

The proportion of iron and steel workers organized was 
probably at its greatest in 1891, when the union had a mem- 
bership of 24,068 out of perhaps 100,000 eligible, or 24%.* 
But even at this time it is doubtful if as much as 50% of 
the steel workers in Allegheny County, the center of the 
heavy industry, were members. 

In June, 1892, when the union's contract at Homestead 
was about to expire, H. C. Frick as spokesman for the 
Carnegie interests met the union representatives in confer- 
ence and presented three demands, as follows : 

1. The basis of the sliding scale should be altered. (Under 
the 1889 agreement, wages were to rise and fall with the price 
of steel billets, but should reach a minimum when billets were 
selling at $25 a ton. The company proposed that this basic 
minimum should be lowered to $22.) 

2. The date of the expiration of the scale should be changed 
from June 30 to December 31. 

3. A reduction of tonnage rates for certain workers was de- 
manded. (The occasion for the reduction was a series of changes 
in the mechanism of the plant, which had greatly increased the 
capacity of the works.) 

These demands were unacceptable to the union. The pro- 
posed wage reductions affected only a few hundred of the 
workers in the plant, but these were the very men who be- 
longed to the union, and it was felt that reductions in their 


tonnage rates would be followed by reductions all along 
the line. The expiration of the contract in winter-time was 
dangerous because it gave the employers the advantage in 
the discussions over renewal; the workers would go far to 
avoid a strike in winter. The demands were therefore re- 

Every one knew that Frick was eager for a fight. In 
1889 he had demanded dissolution of the union and signature 
of individual contracts. In 1891 he had directed the fight 
which broke up the miners' union in the near-by Connells- 
ville coke district. Even before he met the union leaders he 
had completed the preliminary arrangements for hiring a 
large force of "watchmen" from the Pinkerton Detective 
Agency and had caused to be built a 1 5-foot board fence 
around the works, surmounted with barbed wire and pierced 
at intervals with holes loopholes, the workers called them. 
Nobody was in doubt that the real issue at Homestead was 
unionism versus non-unionism. 

The negotiations broke down before the company had even 
secured the maximum concessions that the union was willing 
to make. 5 It became evident that the company was throwing 
its great resources into a finish fight. The Pinkertons col- 
lected 312 men ready for service at Homestead, and shipped 
to Pittsburgh from Chicago 250 rifles, 300 pistols, and am- 
munition, all of which were loaded onto two barges. The 
"watchmen," thugs gathered from all over the East and 
Middle West, were put secretly on barges near Youngstown. 

As the barges proceeded up the Monongahela River dur- 
ing the night and early morning of July 6, they were spotted 
by the scouts of the strikers. Most of the town of 12,000 
was lined up along the shore as the barges prepared to dock. 
With a rush the workers broke down the 1 5-foot fence at the 
waterline, and surged forward to block the landing of the 
Pinkertons. These, armed with rifles, threw out a gang- 
plank and prepared to land. The workers drove them back. 


The fight with the Pinkertons continued, intermittently, 
all day. The officers of the Amalgamated Association tried 
to calm down the workers, and President-elect Garland finally 
succeeded in arranging a truce. The "watchmen" were dis- 
armed, and marched up between two rows of men, women 
and children through the town to the skating-rink. The 
day's dead numbered about ten, most of them strikers. 
The militia arrived at Homestead soon after and protected the 
scabs whom the company imported. 

The union was poorly prepared for the struggle that fol- 
lowed. It paid no benefits except strike benefits, and con- 
sequently its reserve was not large. Furthermore, its treasury 
had been depleted by two years of unsuccessful strikes. Out 
of 2,000 men in the Homestead works eligible to membership 
in the Amalgamated Association, only 400 had joined up to 
the beginning of 1892; and an organizing campaign during 
the spring brought in only 400 more. 6 During the strike, 
relief cost $3,000 per day, and since the ranks remained 
nearly unbroken for four and a half months, the expense 
was enormous. The A. F. of L. collected for the legal 
defense of strikers over $7,000, of which a little over half 
was spent. 

The idea was current among the strikers that the Home- 
stead mill could not operate without the skilled men. In 
fact the skilled men do seem to have been necessary. Al- 
though the company had begun importing scabs as soon as 
the militia arrived, it made comparatively little progress in 
running the mill until October. But the workers did not 
manage to tie up all of the company's other mills. The 
company's huge profits of the previous decade gave it large 
staying power. 

The strike was declared off November 21. It was stated 
at the time that less than 800 of the 3,800 who had gone 
on strike in June had gone to work in the mill, and only a 
limited number elsewhere. The fact that there were so few 


deserters furnishes a fine proof of the strikers' solidarity in one 
of the major struggles of American labor history. 7 

The Amalgamated Association up to 1892 had been a real 
force in the iron and steel industry. Even employers ad- 
mitted its power. A. F. Huston, vice-president of the Lukens 
Iron and Steel Co., said in July, 1892, 

Iron and steel labor in Pittsburgh and vicinity commands 
higher wages than in any place east of it. The reason for this 
is that the Amalgamated Association is stronger in the western 
part of Pennsylvania than anywhere else. (Boston Herald, 
July 28, 1892.) 8 

The defeat at Homestead ended the union's power in steel. 
If the union had maintained its organization at Homestead, 
it might eventually have controlled all the other Carnegie 
mills. It was not driven out of the Jones & Laughlin plants 
until 1897, and had locals in the Illinois steel mills as late 
as 1901. 

The Battle for the Key Positions 

Both employers and unions had learned by the end of the 
1 9th century the importance of controlling the low-cost 
mills, especially in those branches of the industry where 
technique was rapidly being improved. The union did not 
immediately collapse after the Homestead strike, but made 
aggressive attempts to extend its control in those trades 
where it still had some strength. In 1899 it claimed 85-90% 
of the sheet iron workers and 95% of the tin plate hot-mill 
workers, while the tin house men had been organized by the 
president of the Amalgamated Association into a separate 
union which had secured a contract from the newly-formed 
American Tin Plate Co. 9 

When the American Tin Plate Co., the American Sheet 
Steel Co., and the American Steel Hoop Co. became part 
of the United States Steel Corp. in 1901, the Amalgamated 


Association promptly moved to sign up all the plants of the 
three companies. It had had enough of seeing the big com- 
panies sign for their high-cost mills and then close them 
down while they concentrated production in the low-cost 
mills. It called a strike July 14 against the three companies, 
and the union workers responded loyally ; but only one non- 
union mill joined their ranks. The union was unable to 
penetrate such localities as Vandergrift, in Allegheny County, 
Pa., where the American Sheet Steel Co. had a highly 
modernized plant and a closely-guarded company town, both 
built only five years before. As a last desperate gesture, 
President Shaffer of the Amalgamated Association on 
August ii issued a call urging the rest of the U. S. Steel's 
168,000 workers to strike. But it was, estimated that only 
14,000 answered the call, and of these a large percentage 
were members of the union who were forced into the strike 
on threat that their charter would be revoked. 10 

The strike of 1901 was a defeat for the union, and all but 
ended its power in the plants of the U. S. Steel Corp. 
Clauses 3 and 4 of the agreement which ended the strike 
practically meant that the union agreed not to organize the 
non-union workers in the American Tin Plate Company's 

These provisions were a symptom of the union official- 
dom's attitude where U. S. Steel was concerned. From 1901 
to 1904, according to Pres. M. F. Tighe of the Amalgamated 
Association, the union gave way to every request that was 
made by the U. S. Steel subsidiaries "when they insisted 
upon it." xl 

* "Third. The company reserves the right to discharge any em- 
ployee who shall, by interference, abuse or constraint, prevent another 
from peaceably following his vocation without reference to connection 
with labor organizations. 

"Fourth. Non-union mills shall be represented as such, no attempts 
made to organise, nor charters granted; old charters retained by men 
if they desire." (U. S. Commissioner of Labor, Report cited, vol. 
Ill, p. 127. Emphasis not in original.) 


The American Sheet Steel Co. and the American Tin 
Plate Co., both subsidiaries of U. S. Steel, were merged to 
form the American Sheet & Tin Plate Co. Sixty per cent 
of the American Sheet & Tin Plate Co/s mills were still 
union in 1909, when the Amalgamated Association was 
locked out and completely eliminated from the U. S. Steel 
Corporation's plants in a 1 4-month struggle. Repeated at- 
tempts during this strike to penetrate the company town 
of Vandergrift were unsuccessful. Union organizers were 
menaced by mobs of thugs, attacked, and run out of town; 
meetings were prohibited, and owners of halls were intimi- 

The strike of 1909 was a militant strike, at least as far 
as the rank and file were concerned. At Steubenville, the 
company detectives brazenly attempted to bring imported 
scabs into the LaBelle mill in full sight of the crowd of 
pickets. The crowd chased the detectives, who ran and shot 
backwards, wounding four people. 12 When the Aetna plant 
(Bridgeport and Martins Ferry, Ohio) reopened early in 
1910, Sol Edwards, picketing striker, was shot and killed by 
a scab. 

The iron and steel workers in the years 1881 through 1905 
conducted strikes at the rate of more than 33 per year, or 
nearly three a month, and nearly two-thirds of these (517 
out of 835) were not called by any union. The Amalga- 
mated Association was capable, almost up to 1914, of con- 
ducting militant actions. As the principal union in the 
industry, it was largely responsible for the fact that 43% 
of the iron and steel strikes called by unions in the 25-year 
period, 1881-1904, were partly or wholly successful. 13 

The Amalgamated Association in the South 

The iron workers had lodges in the South as far back as 
the days of the Sons of Vulcan. The Amalgamated Asso- 
ciation lost its hold in the Birmingham area in 1902. It had 


an agreement with the Tennessee Coal & Iron Co. covering 
this company's skilled workers at Bessemer, in the Birming- 
ham area, and a lodge had been formed in the steel works 
of the company at Ensley, adjoining the city of Birmingham. 
On Labor Day, 1902, many of the lodge members paraded, 
and when the night shift came on some of them started to 
upbraid the men on day shift who had worked right through 
and had not paraded. There was an argument and one of 
the workers was shot in the leg, whereupon the superin- 
tendent fired several unionists. The other unionists at 
Ensley struck, and the lodge at Bessemer came out in sym- 
pathy. Both strikes were lost. 14 In 1909 the union was 
completely eliminated from the South. 

Attitude to Negroes and Unskilled 

The poor success of the union in the South and its failure 
elsewhere to maintain itself and meet the companies on equal 
terms was due in large part to the exclusive, sectarian atti- 
tude which led it to neglect the interests of all but the skilled, 
native-born workers. This attitude came out most clearly 
with reference to the Negroes in the South. When the 
Tennessee Coal & Iron Co. still had an agreement with the 
union, its president once asked why the union did not organ- 
ize the competing plant of the Republic Iron & Steel Co. 
at Thomas (Birmingham). He was told, "Because they have 
too many Negroes there." 15 In 1906 a union delegation 
trying to settle a strike in Birmingham asked the super- 
intendent to "discharge all the niggers" as a condition of 
their union calling off the strike. 16 

In the North, the employers have tried to split off the 
white worker from the Negro worker ever since they im- 
ported Negro puddlers from Richmond to Pittsburgh to 
break a strike in 1875. The Amalgamated Association did 
not admit Negroes to membership at all until several more 
strikes had been broken in the same way. In 1881 Negroes 


were admitted, but only in the North and only in Jim-Crow 
lodges. In the critical strike of 1901 the ranks of the strikers 
were weakened by a flagrant piece of race discrimination on 
the part of certain white unionists, which made it possible for 
the employers to use some skilled Negro workers to break 
the strike at the Butler St. plant of the Carnegie Steel Co. 

A number of Negroes employed in the Butler* St. plant of 
the Carnegie Steel Co. had been admitted to the Lafayette 
Lodge of the Amalgamated Association. They struck with 
the other unionists in 1901. Three of the Negroes, together 
with a white officer of their local, went down the river to get 
work at a union plant not affected by the strike. The super- 
intendent promised them work if the white workers already 
there would work with them. But the white workers, their 
union "brethren," refused. The colored men then returned 
to their mill and led a back-to-work movement of all the colored 
strikers. 17 

Yet the Negroes have shown themselves excellent unionists 
where the whites were willing to receive them as such. When 
the American Federation of Labor unions in the metal finish- 
ing plants of the Birmingham area went on strike in 1918 
for the 8-hour day and other demands, the steel plants became 
involved, and the Negroes, who made up 40 to 45% of the 
force in the heavy industry, struck and fought shoulder to 
shoulder with the white workers under the leadership of the 
International Union of Mine, Mill & Smelter Workers. A 
gang of bosses' agents including one city policeman broke up 
a meeting in North Birmingham, kidnapped a white organ- 
izer and a Negro organizer, took them far into the country 
and gave them a terrible beating. Another Negro organizer's 
house was dynamited. 

Technically, membership in the Amalgamated Association 
has been open ever since 1889 to unskilled and semi-skilled 
steel workers not claimed by any other craft union, such as 
the carpenters or machinists. Practically, the matter of ad- 


mitting the unskilled has been left up to the several lodges. 
These were for many years free to refuse admission to the 
unskilled; and even though a new growth of industrial- 
unionist sentiment culminated in 1911 in a rule that all sub- 
ordinate lodges should be obliged to accept the unskilled on 
application, the lodges have not always complied. 

The Amalgamated Association has also maintained a rather 
aloof attitude toward the various foreign-language groups, 
who in 1910 actually made up a majority of all the steel 
workers in the country. Yet the foreign-born showed a ready 
willingness to organize, and led several important strikes be- 
fore and during the war period. 

Failure of the Amalgamated Association Leadership 

The high officers of the Amalgamated Association have 
set the tone of the suicidal exclusiveness and narrowness in 
their union. They have taken great pains to avoid inde- 
pendent political action by the workers. They have fought 
the sentiment for industrial unionism. In putting the brakes 
on the more militant members of the rank and file, the 
officials have consciously or unconsciously performed a 
service to the employers which the latter have not been slow 
to appreciate. 

Until quite recently, the presidents of the union have 
regularly been awarded political jobs by the political ma- 
chine where the steel bosses have a determining voice. Two 
former presidents went directly into the service of the em- 

Miles S. Humphreys, first Grand Master of the Sons of 
Vulcan, became commissioner of labor statistics of the state 
of Pennsylvania, and afterwards fire commissioner of the 
city of Pittsburgh. Joseph Bishop, last president of the Sons 
of Vulcan and first president of the Amalgamated Associa- 
tion of Iron and Steel Workers, became secretary of the 
board of arbitration of the state of Ohio. John Jarrett, the 


next president, tried hard to get the job of first U. S. Com- 
missioner of Labor Statistics, failed, and became succes- 
sively secretary of the American Tin Plate Co., consul at 
Birmingham, England, and business man in Pittsburgh. 
William Weihe (1884-1892) became inspector of immigra- 
tion in New York. M. M. Garland (1892-1898) became 
surveyor of the port of Pittsburgh, and later Representative 
from Pittsburgh in the lower house of the United States 
Congress. Theodore Shaffer (1898-1906), a former 
preacher, dropped out of the labor movement when defeated 
for reelection to the presidency, and did not go into public 
life. P. J. McArdle (1906-1912) was elected to the Pitts- 
burgh city council on the Republican ticket, and in 1933 was 
still a member. John Williams (1912-1918) became secre- 
tary of a steel manufacturers' association on the Pacific 
Coast. His successor was Michael F. Tighe, the incumbent 
up to I933. 18 

Union officials who get elected to public office on capitalist 
party tickets show their true colors in a crisis. One, Wad- 
dington of Newcastle, Pa., was elected sheriff of Lawrence 
County with the support of the official Journal of the Amal- 
gamated Association shortly before the strike of 1909. When 
the strike at Newcastle became intense, Waddington issued 
orders to keep all "pickets and persons" off the public street 
in front of the mills. The picketing continued, so he had 31 
pickets arrested and clapped in jail. 

The close connection of the union officialdom with the 
Republican Party, which is also the party of the steel bosses, 
has been made possible by the union's opposition to inde- 
pendent working class political action. Thus the union's 
most distinctive political activity has been its support of the 
protective tariff which has brought big profits to the steel 
bosses. 19 


Steel Employers Smash Unions in Other Industries 

The steel companies have smashed the unions on the Lakes 
and the Iron Range as well as in the mills. On the Lakes, 
the U. S. Steel's ore transport subsidiary united with the 
other ore-shipping firms in the Lake Carriers' Associa- 
tion and eliminated the unions one by one, beginning in 1904. 
The last effort of the unions was a three-year strike which 
started in 1908. A jurisdictional dispute between the Inter- 
national Longshoremen's Association and the Lake Seamen's 
Union was of great service to the employers. 20 

On the Iron Range, the Western Federation of Miners 
conducted an organizing campaign in 1907. The Oliver Iron 
Mining Co., subsidiary of U. S. Steel, answered with ter- 
rorism and goaded the workers into a premature strike, 
which was lost. The skilled American workers, steam shovel 
men, engineers, and crane operators, did not join with the 
immigrant miners, and the skilled unions were not smashed 
until later. Another iron miners' strike began spontaneously 
in 1914, and was led by the I. W. W., but with no more 
lasting results. 21 The largest iron miners' strike to date, 
also led by the I. W. W., came in 1916. It is described below. 
The organization did not survive the strike. 

The resistance to the miners' organization campaign in 
eastern Kentucky in 1931 was directed largely from the 
U. S. Steel Corporation's coal town of Lynch. The erec- 
tion of structural steel in New York City has been on a 
non-union basis since 1904 because of the pressure exerted 
by the U. S. Steel, the Bethlehem Steel, and the financial in- 
terests back of them. The anti-union forces which control the 
steel industry are a standing menace to unionism in other 
industries as well. 


Early "Left-Wing" Activities 

Various groups on the left wing of the labor movement 
have kept alive the sentiment for industrial unionism and 
socialism, a sentiment which at times has permeated deeply 
even the Amalgamated Association itself. The Socialist 
Labor Party and the Socialist Trades and Labor Alliance, the 
latter formed as the Knights of Labor were ceasing to be 
a factor in the industrial field, were the leaders of this left 
wing in the eighteen-nineties. 

The Western Federation of Miners, an organization with 
a revolutionary program which for a time in the nineties was 
very strong in the Rocky Mountain area, and which partici- 
pated in the founding convention of the I. W. W. in 1905, 
claimed jurisdiction over iron-smelting, but was always chiefly 
interested in the non-ferrous metals and in mining. The 
Federation never on its own initiative ran an organization 
campaign in the iron-smelting industry on any considerable 
scale. About 1910 it went into a decline. It became affiliated 
in that year with the A. F. of L., and six years later 
changed its name to the International Union of Mine, Mill 
and Smelter Workers. It was given jurisdiction over the 
blast furnaces, the only "productive" section of the iron and 
steel industry not claimed by the Amalgamated Association. 

The I. W. W. was advertised to the steel workers by its 
activities in the strike against the Pressed Steel Car Co. at 
McKees Rocks in 1909. Although it carried on some propa- 
ganda in 1906 at Reading, an old iron center, and organized 
a local in the Clark Rolling Mill at Massillon, Ohio, in 1910, 
the I. W. W. never secured a real foothold in the steel mills. 

However, it led several strikes on the Iron Range, the 
last and most militant being in 1916. Ten thousand workers 
were affected directly and 15,000 indirectly in that strike. A 
thousand gun thugs, deputized by the sheriff, were unable to 
cow the miners, so the militia was sent for. 22 A group of 


deputized gunmen went to a miner's house and a fight started 
in which two men were killed. A miner was shot and killed 
on the picket line. The strike ended without a settlement, 
but the principal demands of the workers are stated to have 
been granted directly afterwards by the steel companies. 23 
Here was an instance where militant action won an imme- 
diate success, which however was not transformed into a 
permanent organizational gain. 


The steel workers themselves initiated most of the strikes 
which affected the industry from 1910 to 1918. The series 
of spontaneous strikes which mark this period show clearly 
that the semi-skilled and unskilled do not wait for the leader- 
ship of the skilled when they are really aroused. The 
Bethlehem strike of 1910 began among the skilled workers 
in the machine shop; but the East Youngstown strikes of 
1916 were begun by a group of laborers, and the short stop- 
page at the Braddock steel plants in the same year was 
brought about by the strikers from a neighboring plant. 

Bethlehem Strike of 

The most important unorganized strike in the iron and 
steel industry during the immediate pre-war period was that 
at South Bethlehem, Pa., in I9io. 24 Wages, hours, and con- 
ditions of work were all at issue, but the immediate occasion 
was a protest against Sunday work and speed-up, and a de- 
mand for the restoration of extra pay for overtime and 
Sunday work. The strike at first affected only three machine 
shops; but when organizers appeared and drew up demands 
for the other departments, most of the other workers quit 
too. The workers were organized by the A. F. of L. into 
ten different craft unions. They became so militant that the 
company asked for and got the state police, who put up their 
horses in the company stable. The workers objected so 


strongly to the presence of the cossacks that the latter started 
shooting and killed a bystander. Some 30 strikers and sym- 
pathizers were arrested and kept overnight in the company 
office, and their hearings were held in Pres. Schwab's office 
the next day. The strike was lost. 

Youngstown Strike of 1916 

The most spectacular outburst of the war period was the 
so-called East Youngstown riot of January, 1916, which is 
noteworthy also as growing out of a strike originated by un- 
skilled and unorganized workers. Beginning about December 
20, 1915, laborers walked out of the Republic Iron & Steel 
Co. plant, demanding an increase in wages from 19^2 cents 
an hour (lo-hour day). By January 5, from 300 to 500 
workers were out, mostly laborers. On that day the strikers 
pulled out many workers from the Brown-Bonnell and Bes- 
semer mills at Lansingville and Haselton, and many also quit 
at the plant of the Youngstown Sheet & Tube Co. The 
number of strikers at the Republic plant grew to 2,500 out 
of 6,000 employed. A. F. of L. organizers appeared. The 
strikers were in a fighting mood. 

An increase of wages was announced by the Carnegie Steel 
Co. in Youngstown. Judge Gary, who had opposed granting 
the workers* demands for a wage increase, had his mind 
changed by the militant action of the strikers. The A. F. 
of L. organizers made no attempt to organize the Youngs- 
town Sheet & Tube Co. workers, but put out a series of 
wage-and-hour demands, applicable to all mills, which 
included a 25-cent-an-hour minimum for unskilled labor. 

On January 7 four "independents," including Republic and 
Youngstown Sheet & Tube, announced increases to 220 an 
hour for laborers, with no definite statement on skilled 
workers. The number on strike on this date was estimated 
as low as 8,000 (by the local press) and as high as 15,000 
(by George P. West; see The New Republic t January 20, 


1916, p. 330), out of 30,000 steel workers in the district. 
In East Youngstown, a striker was arrested, but a spirited 
mass protest at the jail forced his release. 

Just at the time when the strikers were assembling to 
discuss the companies' refusal to meet their full demands, 
word came that two train loads of strikebreakers from the 
South had arrived and were being smuggled into the mills 
by the railroad siding. 25 The rage of the strikers burst all 
bonds. Mill guards fired into a crowd at the mill gates in 
East Youngstown, and three strikers were killed. The work- 
ers raided the saloons, rolled kegs of liquor into the streets, 
emptied them and set them afire. Houses caught and six 
square blocks burned down. The governor ordered out the 
militia, and the strike ended soon after when a further wage 
increase was announced. 

The grand jury, impaneled to find a scapegoat for the 
property damage, brought in a surprising verdict. It actually 
put the blame where it belonged. It found that guards, hired 
by the Youngstown Sheet & Tube Co., had precipitated the 
disturbance, and it indicted Elbert H. Gary and 113 cor- 
porations for violations of a state anti-trust law, charging 
them with conspiracy to keep down the wages of common 
labor and to raise the price of steel. The indictments were, 
of course, quashed. 26 

Other Strikes 

An incident four months later in the strike at East Pitts- 
burgh of workers in the Westinghouse Electric and Manu- 
facturing Co. plant showed that the angry temper of the 
East Youngstown steel workers was characteristic of the 
proletariat in other steel centers too. The Westinghouse 
workers, in the fourth week of their strike, marched to the 
town of Braddock, adjoining East Pittsburgh, and paraded 
up the waterfront of the Monongahela River, where several 


industrial plants, including two belonging to subsidiaries of 
the U. S. Steel Corp., were located. At each plant the 
workers quit in sympathy with the strikers. They arrived 
at the Edgar Thomson plant of the Carnegie Steel Co. just 
before the change of shift, and the men there joined the 
parade. Greatly elated by their success in getting the Edgar 
Thomson men out on strike for the first time in 30 years, 
the strikers planned another parade the following day. The 
plant was then surrounded by a weak wooden fence, not at 
all the same as the concrete wall that has since been built. 
Next day the company stationed an armed force inside the 
plant, and when the paraders arrived, a miniature pitched 
battle took place, ending in the rout of the strikers. 27 By- 
standers were hit with pistol bullets from the plant, and two 
strikers were killed. 

In the same year a strike was lost at the Pittsburgh Plant 
of Jones & Laughlin. In 1918 the big strike in the Birming- 
ham area resulted in defeat. During the same year, the 
machinists led a strike of 5,000 at the South Bethlehem 
works of the Bethlehem Steel Corp. 

At all periods, but especially during the war, small local 
stoppages affecting, it may be, only one department of a plant 
have shown that the workers are still independent at heart 
and cannot be pushed too far by their exploiters. Not all of 
these local strikes appear in the official statistics. 

Workers with experience of the class struggle have learned 
to expect that the forces of the capitalist government will be 
arrayed against them. The experience of Homestead, where 
the sheriff, realizing the strength of the union, refused to 
deputize the Pinkertons at Prick's behest, was not lost on 
the bosses. They hire their own police to-day, and in a 
crisis do not hesitate to subsidize those forces of "law and 
order" which are not directly in their pay. 

The period since 1918 has seen, in the labor movement 



as a whole, a growing realization of the key importance of 
steel. The "left wing" especially has insisted on the neces- 
sity of smashing down this stronghold of reaction. The tac- 
tics followed and the varying success of these tactics will be 
discussed in the next chapter. 

The Strike Has Failed 


Go Back To Work 

This full-page advertisement appeared in the Pittsburgh 

newspapers for a period of 10 days during the steel strike 

in 1919. 


THE failure of the Bethlehem strike in 1910, where ten 
different A. F. of L. unions had tried all at once to sign up 
members from among the strikers, had shown the need for 
some kind of centralized direction at least, if such organiza- 
tion moves were not to result in futility. To many the inci- 
dent showed the greater effectiveness of industrial unionism 
for an industry like steel. Among those who set to work 
to devise a plan of organization for steel, which should 
secure united action among the craft unions and ultimately 
merge them, was William Z. Foster. 

An early convert to the philosophy of revolutionary class 
action, Foster had joined first the Socialist Party and later 
the I. W. W. About 1911 he left the I. W. W. and threw 
himself into union organization in the A. F. of L. During 
the war he and John Fitzpatrick, president of the Chicago 
Federation of Labor, led the fight to organize the industries 
of Chicago. They won a big success with the packinghouse 
workers, who were taken into a single huge local attached 
at first directly to the Chicago Federation of Labor. They 
then turned to steel, in which a great number of A. F. of L. 
unions claimed jurisdiction. 

The story of how Foster induced the heads of these unions 
to come together for a drive on the steel industry is one 
of the less-known episodes of the history of the famous steel 
strike of 1919. Finding that the officials, including those of 
the Amalgamated Association, were not anxious to jeopardize 
the position of their existing locals in such a big undertak- 
ing, Foster established contacts with workers in the rank 



and file of their unions. Thus the officials were subjected 
to a continuous bombardment from within their own organ- 
izations, calling for a steel organizing campaign. Finally, 
Foster went personally to the 1918 convention of the A. F. 
of L. as delegate from the Chicago Federation of Labor 
and succeeded in getting his plan adopted. A committee, in- 
cluding representatives from 24 unions (later increased to 
25), was set up to run the campaign. Samuel Gompers, 
president of the A. F. of L., was chairman at first, but the 
job of acting chairman fell to Fitzpatrick. Foster was 

At this time, membership in practically all unions (includ- 
ing even the Amalgamated Association) was increasing rap- 
idly. The newcomers in the unions were largely unskilled 
and semi-skilled workers, whose attitude to political action 
and reformist tactics was very different from that of the 
conservative skilled workers who had theretofore made up 
the backbone of the American labor movement. There 
seemed to be a real possibility that the new element would 
obtain a controlling voice in the A. F. of L., and that the 
Gompers-Woll clique would be ousted in favor of a more 
radical administration. Part of Foster's purpose in setting 
out to organize the packing and steel workers in great indus- 
trial unions was thus to cause a re-orientation of the Ameri- 
can trade union movement as a whole, away from a 
conservative craft unionism and toward militant industrial 
unionism. 1 

The Great Steel Strike* 

The tale of the steel .organizing campaign of 1918-19, 
which culminated in a strike of about 365,000 workers 
on September 24, 1919, forms one of the epics of American 
labor history. It revealed in naked form the workings of 
class forces in American industrial society the workers 
with a handful of liberal and radical middle-class sympa- 


thizers lined up on one side, and on the other nearly the 
whole weight of the government, the press, the conservative 
middle and upper classes, and of course the "open-shop" 
employers and bankers. The officials of the A. F. of L. 
unions occupied a middle position, giving lip service to the 
idea of organization but sabotaging the efforts to achieve it. 

The National Committee for Organizing Iron and Steel 
Workers was formed August 1-2, 1918, and organization 
work continued for over a year before the strike took place. 
Lack of resources forced the committee to begin work in 
one locality Chicago instead of in all centers at once. 
The big companies granted the basic 8-hour day soon after 
the start of the campaign, which meant that time-and-a-half 
was paid thereafter for all work over eight hours. Workers 
outside the Chicago district did not understand that it was 
the organizing campaign that had forced the concession. 
The committee moved its headquarters to Pittsburgh on 
October I, 1918, for the purpose of spreading the campaign 
and maintaining close contact with the most important center 
of the industry. 

The form of organization was that of a federation of 
trades. Some of the organizers took orders only from the 
international headquarters of their own unions. About 40 
such organizers on the average were kept on the job during 
the whole period, the number rising to 75 during the strike 
period. In addition to these "floating" organizers were the 
stationary organizers under the direct orders of the com- 
mittee. Altogether from 100 to 125 men, including some 
25 chosen to work among the foreign-born, were allocated to 
the job of getting together the steel workers. This was 
probably the largest force of organizers ever assembled for 
a job of unionization in the United States. Even so, it was 
quite inadequate to cover more than the blast furnaces and 
steel plants, and the plan of organizing the iron mines and 
lake transport systems had to be abandoned. 


That organization was essential was demonstrated when 
the strike was finally called September 22, 1919. The re- 
sponse to the call was tremendous. The movement swept 
over twenty states. Foster estimated that 365,000 workers 
had struck, which would mean that the strike was more than 
80% effective in the heavy industry. 3 But no center struck 
where organizers had not been at work, and not even all those 
which had been reached. Except in Youngstown, all plants 
which had gone on strike during the war period failed to 
respond actively to the strike call in 1919. Plants and de- 
partments where the strike took place prematurely (e.g., 
Sparrows Point) also failed to stick in September. In the 
key Pittsburgh district, some towns (Donora, Monessen) 
struck nearly solid. Others (Woodlawn now Aliquippa 
and Midland) were not reached at all. In general the strike 
was partly effective, with the skilled workers responding 
less than the semi-skilled and unskilled. In the Chicago dis- 
trict the strike was solid at first, but weakened early, and 
the same was true of the Steubenville, Wheeling and Youngs- 
town districts. The strike was partly effective in the eastern 
plants, very effective in the Buffalo, Johnstown, Cleveland 
and Colorado districts, and ineffective at Lorain, Birming- 
ham and Duluth. 

The attitude of the capitalist authorities played a big part 
in the strike. Especially in the Pittsburgh district were local 
officials used to hamper organization and prevent meetings 
from the beginning of the campaign. The mayor of Du- 
quesne was quoted as saying, several weeks before the strike, 
"Jesus Christ himself could not speak in Duquesne for the 
A. F. of L." There was often no pretense that disorders 
had actually taken place. State police were called, deputy 
sheriffs sworn in, and private police hired on the plea that 
violence might occur. A regiment of troops was stationed 
at Gary, where martial law was declared. Strikers were 
clubbed, arrested, and terrorized, and their meetings broken 


up. The steel workers, insufficiently educated in the real 
class nature of the state, were influenced by the hostility of 
the government. 

The mass pressure of the workers during the preliminary 
campaign broke down the ban on free speech in Western 
Pennsylvania and elsewhere. But when the strike began all 
meetings were promptly stopped again throughout the 
Pittsburgh district, except in the Pittsburgh Labor Temple. 
The policy announced by Sheriff Haddock of Allegheny 
County was followed by every burgess and mayor of every 
steel town in the county. Haddock issued on September 
20, two days before the strike, a proclamation stating, among 
other things, 

All peace officers throughout Allegheny County until the pres- 
ent emergency [i.e., the strike] has passed are commanded to 
disperse and prevent upon the highways or vacant property of 
all populous sections the loitering or gathering of three or more 
persons, and whenever such gatherings occur to immediately 
direct and command such persons to proceed about their lawful 
business, avocation, or return to their homes and habitations. 
(Emphasis not in original.) * 

Picketing was suppressed throughout the county. Police 
and company officials went into workers' homes and forced 
them to go to work.* 

The bosses did not even stop at murder. Mrs. Fannie 
Sellins, who had been largely responsible for organizing 
several mills of the U. S. Steel Corp. in the Black Valley 
district north of Pittsburgh, was brutally murdered by com- 
pany deputies during a mine strike just before the great steel 
strike began. All told, 18 strikers were killed, hundreds 
seriously injured, and thousands jailed on flimsy pretexts. 

* "There were probably a hundred citizens besides our police force, 
a lot of police we had in the mill, that went into the homes, and in 
some instances brought the men to work." A. F. Diehl, general man- 
ager, Duquesne Works of U. S. Steel Corp. (Senate Hearings, p. 
503. Emphasis not in original.) 


At first, there was such a contrast in the attitude of the 
Pennsylvania and Ohio authorities that workers from the 
Sharon and Farrell district marched several miles across 
the state line to hold their meetings. Later, the Ohio authori- 
ties obeyed the orders of the steel trust, and in East Youngs- 
town a whole local union, No. 104, Amalgamated Association, 
was arrested for holding a business meeting. 

The system of handling finances and of supplying food to 
the strikers through commissaries was a model for later 
strikes to follow. It is very remarkable, in view of the thinly 
veiled hostility with which the leaders of the Amalgamated 
Association and the A. F. of L. regarded Foster, on account 
of his radical views, that no charge of graft was ever 
brought in connection with the strike finances. After the 
strike campaign got under way, it financed itself. The co- 
operating international unions must have received back, in 
dues and initiations, most if not all of the half million dol- 
lars or so which they advanced in the early stages. The 
Amalgamated Association had a treasury balance of $137,- 
879.23 on March 31, 1918, and increased this amount to 
$344,024.58 two years later. 5 

The strike held fairly firm for about two months and 
weakened in the third. It was called off January 8, 1920. 
Some causes of its failure may be briefly discussed. 

(i) Hesitancy and timidity of the A. F. of L. leadership. 
This defect, in turn, was a natural result of the decentraliza- 
tion and conservatism of the American Federation of Labor. 
The essence of the plan drawn up by Foster was for a 
concerted, smashing drive, national in scope, that would take 
the companies by surprise, and force them to give in to the 
demands of the workers. This plan would have appealed to 
the rank and file of the steel workers. But Foster dealt with 
the rank and file largely through the intermediary of the con- 
servative union officials. This fact made it difficult to capitalize 


on the alertness and initiative of the developing rank-and-file 

(2) Failure to interest enough skilled workers. 6 The ex- 
cellent results obtained by the rod and wire mill men showed 
what could have been accomplished if a real attempt had been 
made to set up committees of skilled workers in each branch 
of the mills. 

(3) Failure to solve the Negro question. The ground- 
work for this difficulty had been laid long before the strike, 
in the discriminatory attitude of very many A. F. of L. 
unions. But even so, the white strikebreakers were, as 
usual, more numerous than the colored. 

(4) Insufficient support from the railway unions. The 
Interchurch World Movement, which carried out a thorough 
investigation of the strike while it was in progress, quotes 
a local strike leader as saying, "If the rail way men in the 
steel plant yards had struck, this strike would have been 
won." The railroad brotherhoods insisted that their men 
having contracts remain at work, and left it up to the others 
in each local situation to decide whether they would quit 
or not. Only a few did so. 

(5) The greater cohesiveness of the employers' organisa- 
tion. This was a fundamental point. The employers had 
no above-board strike organization; but they all accepted 
the leadership of the U. S. Steel Corp., and Gary spoke for 
all when he spoke for one. The aggregation of unions, pulling 
in 24 different directions and some even scabbing on the 
strike (Stationary Engineers), were no match for this kind 
of united front. 

Failure to present the steel workers' case adequately to the 
public also reacted against the strikers. The facts about the 
steel workers 5 living conditions and demands were not even 
known; the fundamental research had not been done. As a 
result, the chance to win allies in the lower middle class was 
thrown away. 


The machinery of the A. F. of L. was hopelessly out of 
date for a struggle with the steel employers. It had not 
learned the lesson of Homestead, the lesson that the mam- 
moth corporation having semi-monopolistic power cannot be 
successfully fought by the old methods and with the old form 
of organization. The rank and file of the unions were far 
ahead of the officials in their consciousness of the needs of 
the hour. But the officials hesitated, put on the brakes, and 
in the end lost. 

It is an open question whether the heads of the Amal- 
gamated Association and the A. F. of L. really desired to 
win the strike. The writer has satisfied himself by personal 
interviews with two officials of the Amalgamated Association 
President M. F. Tighe, and Vice-President D. J. Davis 
(who wrought such havoc in the National Committee) 
that neither put his full efforts into winning the strike, that 
neither expected it to succeed, and that both had firmly made 
up their minds before the strike that they would organize in 
the plants of the U. S. Steel Corp. only if they were literally 
forced into it. The Amalgamated Association officials took 
an open sabotaging stand against the strike. They withheld 
necessary financial assistance and made an open bid to Gary 
for a separate agreement and settlement on the eve of the 
strike. Finally, they completely withdrew from the National 
Committee after the strike. 

Foster's account of the strike, written shortly after its 
end, was moderate in tone, but contained the history of 
certain actions of the Amalgamated Association during the 
strike with which he disagreed in principle, and on some of 
which he refrained from making a fight at the time in order 
to preserve the unity of the organizing committee. The an- 
swer of the Amalgamated Association, delivered by President 
Tighe through the columns of its organ the Amalgamated 
Journal, was more damning than the charges themselves. 
The Amalgamated Association officials believed, wrote Presi- 


dent Tighe, that the time of sending out the strike vote (July 
20, 1919) was "inopportune"; that "under no condition 
should there be even talk of a strike for at least two or three 
years; that it would take that long to thoroughly discipline 
and educate these new members." 7 (Emphasis not in origi- 
nal.) Not a word of the wholesale discharges at Johnstown 
and elsewhere. Not a word of the favorable business situa- 
tion and the militant temper of the workers. "The time was 
inopportune !" 

Policies of the A. F. of L. Unions in Steel 1920-1932 

The A. F. of L. sponsored a committee in 1923 which con- 
ducted a "drive" for members in the steel mills. This com- 
mittee, which was headed by President Tighe of the 
Amalgamated Association, accomplished nothing except to 
use up $75,000 which had remained in the treasury of the 
National Committee at the close of the steel strike of 1919. 

From that time until 1932, the high officials of the Amal- 
gamated Association did not even attempt to keep them- 
selves informed on conditions in the mills of the big concerns, 
much less establish contacts there. "We have never been 
able to get reliable information regarding wages or working 
conditions ... in and around steel mills," wrote President 
Tighe in I926. 8 

In the defensive strikes which the Amalgamated Associa- 
tion officials were forced to call, they used the methods of 
1875 a simple withdrawal of labor, coupled with the pay- 
ment of small strike benefits, and a warning, published in the 
union journal, advising union members to "keep away" from 
the locality affected. If the local lodges sometimes showed 
militancy, as at Wheeling in 1921, where a striker Elmer 
Cost was shot and killed by a guard ; or at Newport, Ky., 
in 1921-22, when the militia brought in a tank and enforced 
a curfew law in its efforts to curb them, that was their own 
affair. The strike may, and often does, go on officially for 


years (the Newport strike lasted just 7 years) without the 
central office doing anything effective. 

The union was driven out of Wheeling and three Ohio 
towns by the Wheeling Steel Corp. in 1921-24; out of 
Newport, Ky., by the Newport Rolling Mill Co. (since 
absorbed by Armco) and the Andrews Steel Co. in 1921-28; 
out of Fort Worth by the Texas Steel Co. in 1925-26; out 
of the St. Louis Screw Co. plant in 1926-27 ; out of Cleve- 
land by the Bourne-Fuller Co. (which is now a part of the 
Republic Steel Corp.) in 1927; out of Middletown, Ohio, 
by the American Rolling Mill Co. in 1929; and out of the 
Canonsburg (Pa.) Iron & Steel Co. plant in 1931. In 1932 
it lost the Follansbee, W. Va., plant of Follansbee Bros., 
which was closed permanently, and saw its position under- 
mined in the Youngstown plant of the Sharon Steel Hoop 
Co. In June, 1932, it took without even a protest a cut of 
10^2 to 15% in the basic wage scale of its sheet and tin mill 
workers. All attempts to set up new lodges or even to revive 
lapsed lodges during this period failed, so far as is known. 

In February, 1929, a group of workers from the El wood, 
Ind., plant of the American Sheet & Tin Plate Co. (U. S. 
Steel subsidiary) where a wage cut of from 7 to 10% had 
just been imposed, sent a delegation to the A. F. of L. 
to ask for help in getting organized. The executive council 
of the A. F. of L., meeting shortly afterwards at Miami ( !), 
bravely branded the cut as "unjustifiable," "unwarranted," 
and "socially and economically wrong." But it did not 
organize the workers, and neither did the Amalgamated 
Association. The "drive" of the A. F. of L. to organize 
the South, launched in the same year, resulted in an 
organizer being dispatched from the headquarters of the 
Amalgamated Association, whose task it was to organize 
single-handed the i6,ooo-odd iron and steel workers of the 
Birmingham district. His efforts attracted no attention at 


all, during the short time they lasted, from any one except 
perhaps the company spies. 

The height of the Amalgamated Association officials' sur- 
render to the companies and desertion of the workers was 
reached in 1931. The union still had two lodges on the 
Pacific Coast when Bethlehem took over the companies in 
1930. The following letter, which explains itself, was written 
soon after by Pres. Tighe : 

Pittsburgh, Pa., February 7, 1931. 


. . . You ask if there is any of our lodges in the Bethlehem 
Steel Corporation plants, or if there is any propaganda going 
on among their employees at the present time. My answer to 
both questions is "No." 

The Bethlehem as well as the United States Steel, and other 
large corporations of like kind, have no organizations of labor 
in them. Only last year, 1930, the Bethlehem Steel Corp. took 
over the Pacific Coast Steel Corporation with plants at Seattle, 
Wash., and South San Francisco, or as it is called, St. Bruno, 
and immediately the management called the committee of lodges in 
and informed them that as the attitude of the Bethlehem Steel 
Corporation was non-union, it, the Bethlehem Steel, would live 
up to its agreement made with the Amalgamated Association until 
the end of the agreement, but after that its policy would be in 

This statement had the effect of both lodges surrendering their 
charter to the Amalgamated Association, and announce their 
intention of working under the non-union policy of the said 

You can readily see under such conditions how useless it would 
be to attempt to unloose the hog-tied workers of this corpora- 
tion, especially under present industrial conditions. 
Fraternally yours, 

(Signed) M. F. TIGHE, 

The membership of the Amalgamated Association at inter- 
vals is given in the following table : 



Year Membership Year Membership 

1871 (Sons of Vulcan) 1,959 I 9 I 9 *970O 

1881 10,359 1920 3^500 

1891 24,068 1921 25,400 

1901 I3893 1922 15,900 

I9H 4,355 1932 (Sept.) 4,944 

1918 16,100 (in 89 lodges) 

By 1932 the membership had dropped back practically to 
the level of 1911, 21 years before, though the number of 
workers in steel had increased greatly meanwhile. 

Organized iron and steel workers have operated local sick 
and death benefit funds with fair success ever since the days 
of the Sons of Vulcan. Establishment of a national benefit 
system was often debated, and finally in 1903 the national 
convention of the Amalgamated Association established a 
death benefit fund. In 1908 the system was revised and sick 
and accident benefits added. A 1916 amendment made special 
provision for cases of permanent disability. In 1926 all the 
benefits except the death benefit were discontinued "for lack 
of funds." 

Of the few remaining members of the Amalgamated 
Association, a considerable proportion retain their books for 
the sake of the death benefit feature. As a result of the 
union's failure to draw in young blood, the average age of the 
members has increased to such an extent that the death bene- 
fit fund has become seriously endangered. 

The membership tended after the beginning of the crisis 
to include a larger proportion than ever of the relatively 
high-paid men. There is no provision for remission of dues 
in unemployment ; the member must pay up or drop out. 

Granite City, 111., and the Mahoning Valley were the only 
areas which in 1932 still conceded power to this once flourish- 
ing organization. 


Although the Amalgamated Association did not hesitate 
either in 1901 or in 1909 to order out on sympathetic strike 
locals which were thereby obliged to violate collective agree- 
ments with their employers, the union's officers have since 
developed a fanatical devotion to the sanctity of the signed 
agreement. In the steel strike of 1919, the Amalgamated 
Association insisted that its locals having agreements should 
remain at work. The International Union of Mine, Mill and 
Smelter Workers, which formerly, under the name of West- 
ern Federation of Miners, refused to sign agreements even 
when it could have done so, has outdone the Amalgamated 
Association in its insistence on observing contracts. It has 
not hesitated to destroy locals which went on unauthorized 

Opposition Groups in the Amalgamated Association 

Not all of the steel workers have shared the defeatist 
view of the Tighe-Davis administration. For a time it 
even appeared that this administration would be overthrown 
by the action of the union members themselves. The rank 
and file showed an increasing restlessness for several years 
after 1919. An industrial-unionist element, which had always 
existed, gained markedly in strength, so that the conven- 
tions of 1923 and 1924 went on record for a vigorous asser- 
tion of the Amalgamated Association's jurisdictional claim 
granted to it by the A. F. of L. to enroll all workers in 
and around iron and steel works.* The element that sup- 

*The grant to the Amalgamated Association of jurisdiction over 
the whole of the steel mills seems inconsistent with the fact that 25 
A. F. of L. unions were affiliated with the National Committee for 
Organizing Iron and Steel Workers in 1919. The explanation is 
twofold. The campaign of 1918-19 drew in unions having jurisdiction 
over any employees of the steel companies (United Mine Workers, 
International Seamen's Union). But further, there is a distinction to 
be made between the large centers, where the several craft unions 
supposedly maintain organizations of workers outside the steel indus- 
try, and the isolated steel communities where the only organization is 


ported this policy fell after 1923 under the leadership of 
a group calling itself the I.D.K.D.Y. Club, the initials mean- 
ing "I Don't Know, Do You?" This group, as its name 
implies, had no well-defined program (other than impatience 
with the existing leadership of the union). Nevertheless, 
it mustered nearly half the votes in the officers' election of 
1925. But for frantic preparations by the Tighe forces, who 
utilized to the full their control of the Journal and also (it 
was claimed) kept an appointed officer of the union on the 
road for some time before the convention, campaigning for 
Tighe & Co., the reactionary clique would certainly have been 
defeated. The strength of the insurgents was chiefly in the 
large centers; of the administration, in the weaker, smaller 
lodges. The Progressives (as they came to be called) 
finally got the union to launch a drive to revive lapsed lodges. 
The drive was a flat failure. The influence of the Progres- 
sives in the union gradually waned. 

From 1929 to 1932, the Conference for Progressive Labor 
Action (C.P.L.A.), of which A. J. Muste is chairman, at- 
tempted to establish an opposition within the Amalgamated 
Association. The C.P.L.A. adherents sponsored a resolu- 
tion introduced at the 1932 convention of the union to create 
the office of General Organizer and thus to put more em- 

supposedly that of the steel union. In the former case, the craftsmen 
in the mills have joint interests with the workers of the same craft 
outside the mills, and can best be taken care of, according to the 
A. F. of L. theory, by joining the union of their craft. In the latter 
case, they can best protect their interests by joining with the steel 
workers proper. In England, where the workers are well organized 
and the employers still compete with each other, this arrangement has 
worked fairly well. But in a weakly organized country with monop- 
olistic production, such as the United States, the theory has no ap- 
plication. As Foster has pointed out, the mere assertion by the 
Amalgamated Association of its claim to jurisdiction over the whole 
steel industry would solve nothing unless the other A. F. of L. 
unions chose to recognize the claim, and there is no certainty that 
they would do so. (The Great Steel Strike, p. 258.) Jurisdictional 
(disputes within the A. F. of L. show no tendency to die out. 

International News Photo 


Organizer and leader of the great steel strike of 1919, as he appeared 

at that time. 


phasis on organizing in the field. The resolution was 
defeated by 28 votes to eight. Early in 1933 the C.P.L.A. 
was weakened by internal splits. It had succeeded in win- 
ning the leadership of a few groups of unemployed steel 
workers in Pittsburgh and the Youngstown district. 

The Metal Workers Industrial League 

Discontent among organized and unorganized steel work- 
ers with the policies and tactics of the Amalgamated Asso- 
ciation, and the latent desire for a real union of steel 
workers, crystallized in 1929 when the Metal Workers In- 
dustrial League (M.W.I.L.) was formed at Pittsburgh. 
The initiative in starting the M.W.I.L. came from the Trade 
Union Unity League. 

The M.W.I.L. did not set itself up, at the time, as a 
union in opposition to the Amalgamated Association. It 
undertook to organize groups of steel workers and other 
metal workers, on the basis of industry rather than craft, 
to fight for the immediate demands of these workers. The 
Metal Workers Industrial League led an agitation against 
wage-cuts, speed-up, and lay-offs, and put forward other 
concrete demands. These included posting of working 
schedules (against standing at the gate day after day wait- 
ing for work under the stagger-system), protest against 
forced contributions to "welfare" and Community Chest 
funds, demand for adequate safety protection, etc. In the 
space of three years, it is estimated that the league won 
about a hundred of these minor demands. 

The Steel and Metal Workers Industrial Union 

In August, 1932, the Metal Workers Industrial League 
reorganized as the Steel and Metal Workers Industrial 
Union. To the organizing convention, which was held at 
Pittsburgh, came delegates from all the important steel- 
producing districts east of the Rocky Mountains. An 


especially strong delegation was present from the Youngs- 
town area, where hundreds of former members of the 
Amalgamated Association, disgusted with the failure of that 
body to make a fight against a cut of ioj^% to 15% in the 
basic wage scale for sheet and tin mill workers, had 
streamed into the Metal Workers Industrial League. But 
workers from centers without any history of organization 
in the Amalgamated Association or any other union were 
present in force, indicating the degree to which the Metal 
Workers Industrial League had made good its purpose of 
organizing the unorganized. 

The new union repudiated and condemned "the policies 
of class peace and class collaboration by the leadership of 
the Amalgamated Association" and the "fake 'revival' Pro- 
gressive movements of the Muste program." It announced 
its intention of organizing and leading "militant mass 
struggles of the steel and metal workers against the em- 
ployers and their agents, for better wages, working and living 
conditions." It listed 18 demands, including the six-hour 
day without reduction in wages; establishment of better 
conditions on the job ; adequate measures for the protection 
of life and limb ; full and complete equality for Negroes, both 
on and off the job; abolition of company towns, company 
stores, scrip and evictions ; unrestricted opportunity to organ- 
ize; abolition of speed-up; against compulsory contributions 
in the shop for charity and welfare; against persecution and 
deportation of foreign-born workers; for no discrimination 
against women and young workers ; for immediate local cash 
and food relief for the unemployed; for recognition of the 
union, and for collective agreements to establish union con- 
ditions. The convention adopted general political demands 
for unemployment and social insurance, and a statement 
that the union stood "against the bosses' preparations for 
a new world war, and for the defense of the Soviet Union." 
The new organization rejected arbitration as a method, and 


identified itself with "the struggle of the entire revolution- 
ary working class movement for its broader economic and 
political demands and aims," the final goal being "the aboli- 
tion of capitalist exploitation and the capitalist system, and 
the establishment of a Socialist Society." 

The constitution adopted is different in many important 
respects from that of the Amalgamated Association. A 
definite top limit of $35 a week is set to the wages of its 
officers, this sum contrasting rather sharply with those of the 
six top officers of the Amalgamated Association who get 
over $4,000 a year each. Special provision is made for 
organizing the unemployed, under certain circumstances, into 
separate branches, which should meet and work jointly with 
the local unit of the Steel and Metal Workers Industrial 
Union. The Amalgamated Association has consistently 
neglected the unemployed. 

The form of organization of the Steel and Metal Workers 
Industrial Union is industrial, with all crafts and occupa- 
tions in each mill combined in a single mill local. Dues are 
fixed on a sliding scale, varying from 50 every two weeks 
(for unemployed members and for members of women's 
auxiliaries) up to 250 every two weeks. Dues in the Amal- 
gamated Association amount to $1.25 a month for workers 
earning less than $5 per day, and more for the higher-paid 

Initiation into the S.M.W.I.U. is 500 for workers earn- 
ing up to $10 per week, $i for those earning $10 to $25 
per week, and $2 for those earning $25 and up. Initiation 
into the Amalgamated Association is $3 for workers earning 
$2.50 or less per day, and more for higher-paid workers.* 

*The following is quoted from section 169 of the Constitution and 
General Laws of the A. A. for 1932-33: 

Each new member of a sub-lodge earning more than $2.50 per day, 
shall pay an initiation fee of $5.00; and those earning $2.50 or less 
per day, shall pay an initiation fee of $3.00; but where the different 
locals desire a higher initiation fee, same to be left to the discretion 


In omitting all benefits, the new union has reverted to the 
practice which the organized iron and steel workers followed 
when they were still members of a militant union. 

Rank-and-file control and initiative cannot be insured by 
constitutions, but a reading of the basic document of the 
Steel and Metal Workers Industrial Union makes it clear 
that a desire to extend the power of the rank and file was 
present in the minds of the drafters. The constitution is 
intended, in a word, to serve as an instrument of trade union 
democracy a conscious effort to get away from the bureau- 
cracy which has come to characterize the Amalgamated 

The Metal Workers Industrial League had been set up 
as an organization for both the light and the heavy industry, 
and had developed some strength in certain plants of the 
finishing industry. The Steel and Metal Workers Industrial 
Union has four main divisions iron and steel, electrical 
products, machinery manufacturing, and light metal prod- 
ucts but its orientation is, as its name implies, definitely 
on the heavy industry. Organization in the light branches 
is encouraged, but when these branches develop to maturity, 
it is anticipated that each will form its own national commit- 
tee within the union. These committees will have a semi- 
independent union life of their own within the main structure. 
When two or more such committees have been set up and 
have begun to function, it is planned to reorganize the 
Steel and Metal Workers Industrial Union into a federa- 

of the locals ; and for dues, each member of a sub-lodge earning less 
than $5 per day shall pay the sum of one dollar and twenty-five cents 
($1.25) per month. Members earning $5 to $7.50 per day shall pay 
$1.50. Members earning $7.50 to $10 per day shall pay $1.75. Mem- 
bers earning $10 to $12.50 per day shall pay $2. Members earning 
$12.50 to $15 per day shall pay $2.50. Members earning $15 to $20 per 
day shall pay $3.25. Members earning $20 or over shall pay an 
additional $i per month for each $5 earned over $20 per day. 


tion of separate metal unions, each unit of which shall cover 
one branch of the industry. 

In the heavy industry, the orientation is on the large 
plants, with the Pittsburgh, Mahoning Valley and South 
Chicago districts selected for concentration by the organiz- 
ing convention. 

Policies of the Trade Union Unity League 

The Steel and Metal Workers Industrial Union has fra- 
ternal relations with the Trade Union Unity League 
(T.U.U.L.). Between the social theories of the T.U.U.L. 
and those of the leaders of the American Federation of Labor 
are profound differences. The American Federation of 
Labor leadership is more conservative even than that of 
the International Federation of Trade Unions.* Yet in the 
world trade union movement the International Federation 
of Trade Unions represents the conservative wing, while the 
Red International of Labor Unions represents the radical 

The American Federation of Labor officialdom defends 
the established order and believes in changing it gradually 
or not at all. This officialdom wars actively within the 
unions against militants who oppose its class-collaboration 
policy. The American Federation of Labor does not neces- 
sarily enter even a formal objection if one craft or group 
of workers advances its selfish interests at the expense of 
other sections of the working class. Its leadership "collabo- 
rates" with employers "for the good of industry," accepts 
the philosophy of arbitration in industrial disputes, and takes 
the part of the Wall Street government in international 

* The International Federation of Trade Unions, also known as the 
"Amsterdam International," takes its political orientation from the 
Labor & Socialist (Second) International. The American Federation 
of Labor was affiliated with the International Federation of Trade 
Unions for a brief period just after the war. 


affairs. The high officialdom of the A. F. of L. has, in fact, 
been incorporated into the ruling class machinery. 

The T.U.U.L. and its unions, proceeding on the theory 
that there is a constant state of class-war between the work- 
ers and the employers, reject all policies of "class collabora- 
tion," arbitration, and narrow nationalism. They favor 
organization, on a basis of equality, for all workers regard- 
less of race, creed, color, age, sex or working- job, and they 
stand for the international solidarity of the working class. 
Unions, they believe, should be industrial in form and should 
be democratically controlled by the rank and file. They accept 
the necessity for collective agreements as a means of con- 
solidating their gains. 

The T.U.U.L. organizations start with concrete economic 
demands. The winning of these demands is considered their 
most important immediate task. At the same time the leaders 
recognize that there is a definite limit to the economic con- 
cessions that can be won under capitalism, and they attempt 
to educate the workers regarding the class character of the 
state. This is not difficult; indeed such education is of the 
nature of the strike struggle itself. The workers find them- 
selves fighting not only the employers but the police and the 
local government apparatus which are nearly always controlled 
directly by the employers or friendly to them. In large and 
important struggles the T.U.U.L. leaders make use of further 
opportunities for the political education of the rank and 
file of the workers. 10 Political demands, however, should 
not be pressed to the exclusion of economic demands, in the 
view of the T.U.U.L. leaders. But "every turn in every strike 
movement should be skillfully used, as also each change in 
the outlook of the masses, every action by the enemy, for 
the purpose of adding various political demands to the eco- 
nomic demands first pressed at the outset of the particular 
fight/* " Such a politicalization of the issues becomes the 
more obvious as the federal government aided by the A. F. 


of L. officialdom sides openly with the employers as it has 
especially in strikes that have taken place against the terms of 
the National Recovery Act codes, and as it ultimately does 
in every really crucial struggle. 

The T.U.U.L. advocates the organization of the un- 
organized, and at the same time organizing the opposition 
within the American Federation of Labor unions against the 
reactionary officialdom and its apparatus with the purpose 
of overcoming the influence of these "labor lieutenants of the 
capitalist class" and releasing the militancy of American labor. 
The T.U.U.L. urges its sympathizers to form a united front in 
the factories with the unorganized, and with the rank and file 
of the non-revolutionary trade unions. Against reactionary 
leadership, a continuous campaign of exposure is to be 
conducted, swinging the membership toward the militant 
channels of industrial unionism. 

The Struggle for Hegemony 

The Metal Workers Industrial League had begun to be 
a factor in the Ohio steel mills when the 1,600 employees of 
the Empire Steel Corp. at Mansfield went on an unorganized 
strike in May, 1931, against a wage cut. 

The Central Labor Union (A. F. of L.) tried to throw 
the leadership of the strike into the hands of the Amalga- 
mated Association, which sent in organizers ; but representa- 
tives of the Metal Workers Industrial League, arriving in 
Mansfield about the same time, exposed the past history of 
the Amalgamated Association in strike situations, and the 
Amalgamated Association organizers had to leave the town. 
Four Metal Workers Industrial League organizers continued 
to work under cover in collaboration with a small minority 
of the more class conscious strikers. Members of the local 
American Legion, assisted by business men and officials 
of the city organization of the American Federation of Labor, 
caught two leading organizers of the Metal Workers Indus- 


trial League, Meldon and Cush, near the picket line, and 
kidnapped them. But such tactics could not defeat the strike. 
It was won the same day after four days* duration and the 
wage-cut was withdrawn. The strikers went back without 
any union organization in either group. 

In September, 1932, immediately after its formation, the 
Steel and Metal Workers Industrial Union became involved 
in a second clash with the Amalgamated Association, at 
Warren, Ohio, where the older union had an agreement in 
the Trumbull plant of the Republic Steel Corp. The com- 
pany, alarmed at the growth of sentiment for the new union, 
fired several of its more active members late in August. At 
the same time the rumor circulated that a 6% reduction in 
wages was due under the sliding scale. The new union had 
the strength to strike the mill over the heads of the Amal- 
gamated Association officials and the company bosses. The 
strike, which lasted one day, led to the firing of 25 more 
of the new union's active workers. 

The calling of the strike against a wage-cut which had 
been rumored but not announced was an error in judgment 
which resulted in a severe setback for the new union 
throughout the district. But the Amalgamated Association, 
which cooperated with the company to break the strike, even 
stating that it had "no grievance with the Republic Steel Cor- 
poration," did not win prestige as a result of the incident. 
The strike had the effect of showing up the reactionary 
character of the leadership in the old union, which was re- 
vealed as placing cooperation with the company ahead of the 
interests of the union members.* It is not surprising that 

* The agreement covered some 100 out of 800 workers in the plant. 
The membership of the Amalgamated Association in the plant was 
much below 100. A letter from its Warren correspondent to the 
Amalgamated Journal describing the strike is interesting, as showing 
where the Amalgamated Association looks for leadership. "A thing 
that is worthy of note," says the letter, "is that not one single citizen 
whose word has the slightest weight in the community, was among 


some members of the Amalgamated Association revolted and 
joined the strike. The company did not dismiss the mem- 
bers of the Amalgamated Association after the Warren 
strike; instead, it encouraged membership. The role of the 
Amalgamated Association as a bulwark and buffer against 
a more militant organization, became perfectly clear to every 
one. The Conference for Progressive Labor Action (the 
"Brotherhood of the Mills") sided strongly and definitely 
with the old union and the bosses, and against the Steel and 
Metal Workers Industrial Union. 

A candid examination of the facts must lead to the con- 
clusion that expressions of militancy on the part of the rank 
and file of the steel workers, such as resulted in the strikes 
at Mansfield and Warren, have been rare in the past decade. 
Indeed, large-scale strikes seemed at one time to have almost 
disappeared from the industry, as the following table shows. 


(Source: Monthly Labor Review of U. S. Bureau of Labor 
Statistics, June, 1932, p. 1359, and later months) 

1016 . 

No. of 


1 022 . 

No. of 
. . . 10 

1928 . 

No. of 
. . . . 2 





1 020 . 

1918 . . 


1024. . 


10^0 . 



IQ2S . 


10^1 . 


IQ2O . 


IQ26 . 

. . . 2 

IQ72 . 

IQ2I . 


1027 . 


The "New Deal" and the Steel Workers 

Beginning in the spring of 1933, the Amalgamated Asso- 
ciation, galvanized at last into action by the presence of a 

the membership of the Steel and Metal Workers Industrial Union. 
Not one single merchant of our city was at any time in sympathy 
with this movement." (Amalgamated Journal, Vol. XXXIV, No. 2, 
September 8, 1932, p. 12. Emphasis not in original.) 


rival in the field, conducted a fairly active organizing cam- 
paign beginning in the Youngstown district and later extend- 
ing to Gary, Pittsburgh and other centers. It signed the work- 
ers up in so-called federal locals, which look like industrial 
unions to the uninitiated ; but the intention is to split up those 
locals later and distribute the members to the several craft 
unions. The Amalgamated Association undertook to purge 
its ranks of radicalism by expelling Elmer Cope, leader in 
steel of the Conference for Progressive Labor Action. The 
Steel & Metal Workers Industrial Union signed up a number 
of new plants, increased its agitation and put its national office 
on a functioning basis. So many new members were re- 
cruited into the union that by September, 1933, it claimed 
a membership of 14,000. This was more than twice the 
number claimed by the Amalgamated Association a year 
earlier. The Amalgamated Association itself had, of course, 
grown in the meantime. 

Following out its policy of militant struggle, the Steel and 
Metal Workers Industrial Union led a number of strikes, and 
in six of these, two of them in the heavy industry, it won 
its most important demands. The victories were won in 
Buffalo, in Ambridge, McKees Rocks and Coraopolis, Pa., in 
the Republic Steel plant at Youngstown, and in the light 
metal industry of New York City. 

The steel employers took counsel together and decided that 
the company union would be an effective weapon in fighting 
the organizing workers. Such organizations were set up 
on a uniform plan in the plants of a large number of com- 
panies, including for the first time the U. S. Steel Corp. 

In some plants the workers failed at first to make any 
real fight against the company union. But where union agi- 
tation had been active there was a different story to tell. In 
the Edgar Thomson works of the Carnegie Steel Co. (U. S. 
Steel) at Braddock, one worker presented himself for elec- 
tion openly as a union representative, and was fired the 


next day, though the company later reinstated him. At the 
McClintic-Marshall (Bethlehem Steel) plant in Rankin, ad- 
joining Braddock, a union man was elected an official of the 
company union, and led an agitation which forced a thirty per 
cent wage increase. At Ecorse, Michigan, the workers tore 
up their company union books as soon as they received them. 
A similar scene was enacted at Gary, one of the strong- 
holds of U. S. Steel. The temper of the workers in the New 
Kensington (Pa.) plant of the Aluminum Co. of America 
was characteristic of the feelings of the steel workers too. 
The company officials explained that there would be a ballot 
on the question of instituting a company union and urged 
the workers to vote for its establishment. When the ballots 
were counted it was found that the company union had been 
overwhelmingly defeated. 

The incident at Ecorse illustrated well the employers' atti- 
tude to the unions in the field. When the company (Na- 
tional Steel Corp.) was unable to put across its own com- 
pany union, it was then ready to see the workers sign up with 
the Amalgamated Association. As soon as the workers were 
made aware of the record of that union in the 1919 strike, 
they would have none of it either. In the end they formed 
an "independent" union of their own. 

Incidents like these indicate that the employers do not 
wish to see the A. F. of L. unions completely destroyed, 
since the field would then be open for other and possibly 
more militant groups. There is the additional circumstance, 
important to the bosses especially in time of war, that a 
reactionary union leadership may hold even a radical mem- 
bership in check. President Moyer of the International 
Union of Mine, Mill and Smelter Workers boasted in 1918 
of his union's ability to stave off the demands of the mem- 
bership for better conditions, and keep the workers at their 
jobs when the employers and the government together were 
unable to do so. He said, 


Given . . . recognition, [our organization has] power to 
discipline its members. . . The withdrawal of the opposition 
of the employing interests in the mining industry to the affiliat- 
ing of their employees with our organization would result in the 
complete organizing of the workers, thereby furnishing an 
agency through which they and the government might deal with 
the men who produce the metals so necessary in this emergency. 
. . . No other method, one may be sure, will adjust the differ- 
ences. (Report to 1018 Convention^ p. 29. Emphasis not in 

But since the A. F. of L. unions, including also the 
Amalgamated Association, may be driven to militancy by the 
rank and file, the employers fight them whenever they show 
signs of winning real power. From Mingo Junction, Ohio, 
from Ambridge, Pa., and from a score of other steel centers 
have come complaints that Amalgamated Association organ- 
izers were arrested, meetings broken up, and union members 

The Amalgamated Association accepted the National Re- 
covery Act and started to work within its framework. The 
employers* code as adopted in August for a QO-day period 
set a maximum limit of 48 hours and six days per week (40 
hours per week when averaged over a 6-month period). 
Even this maximum did not apply to maintenance workers. 
Further it was to apply only "as far as practicable"! The 
code provided a minimum wage scale of from 250 an hour 
in the South to 400 in the Pittsburgh and Chicago districts, 
a lower real wage rate than that which prevailed in 1929. 

The S.M.W.I.U. fought the recovery act from the start 
Its own code provided as follows : 

1. A $20 minimum weekly wage for common labor, for a 6- 
hour day, 5-day week. All hourly and tonnage rates to be 
raised in the same proportion as the increase in the common- 
labor rate. Time and a half for all overtime. Maximum 
working week to be 40 hours. Automatic wage increases to 
meet each rise in the cost of living. 

2. A guarantee of 40 weeks' work per year : all workers getting 
less than 40 weeks' work to receive Unemployment Insurance 


at the rate of full wages the cost to be paid equally by the 
company and the Federal Government. 

3. Unemployment Insurance for all workers permanently laid 
off at the expense of the employers and the Federal Govern- 
ment, and no part of which is to be deducted from the 
workers' wages. 

4. The unrestricted right to organize or join any union without 
interference from company or Government. Company rec- 
ognition of elected workers' mill or shop committees, elected 
openly and representing all workers, without company par- 
ticipation or interference in the elections. 

5. No discrimination against the rights of Negro workers to 
hold any job. No discrimination in hiring Negroes. Equal 
pay for equal work. 

6. Abolition of all speed-up methods. The pace of production 
on the job to be decided by the workers affected. Restora- 
tion of full crews on all jobs, and of spell periods similar to 
1929 working conditions. Strict observance by the company 
of all safety laws. Safety appliances on dangerous jobs to 
be designated by the workers' elected committees. 

7. Old-age pensions equal to two-thirds of regular wages for 
all workers 25 years in the industry, full cost to be paid by 
the company and Federal Government. 

8. No hiring of workers under the age of 16. All now work- 
ing at that age or less to be taken off the job, given school- 
ing and maintained at the expense of the Government. At 
least two i5-minute rest periods per turn for all workers 
under eighteen, exclusive of lunch period, at company 
expense. Same for female workers, regardless of age. Sani- 
tary surroundings and facilities and constant medical super- 
vision for all female workers. 

9. Abolition of compulsory company insurance and all "wel- 
fare" and "charity" collections inside the plants by the com- 
pany or outside agents. 

IO. The right of all workers to assemble, strike and picket with- 
out company or Government interference, for an ever higher 
standard of living. 

In order to establish itself firmly in the industry, the new 
union will be obliged to develop the initiative of the masses 
so as to supply the personnel which is now so sorely needed. 
It will have to concentrate on certain strategic points until 


it has built self-supporting organizations there; to adhere 
firmly to its policies of industrial unionism and of no dis- 
crimination against colored or foreign-born ; to involve in its 
campaigns the various racial and national organizations and 
papers which have influence among the workers and which 
threw that influence against the strike of 1919; finally to 
extend the union's influence broadly by forming a united 
front with any and all workers who are willing to accept its 
basic principle of the class struggle, and thus involving the 
native whites, as well as the Negroes and foreign-speaking 
groups among whom lies its principal influence at the time 
of writing. 

First steps toward carrying out of these essential policies 
were taken in the early fall of 1933, when steel workers were 
striking as never before since 1919. A wave of struggle and 
organization swept through the mills of some of the more 
important companies and gave tremendous impetus to the 
efforts of the militant union. The strike wave in steel was 
closely related to the stubborn resistance of workers in the 
mines of H. C. Frick Coal & Coke Co. (U. S. Steel Corp.) 
who refused to return to work until the company signed an 
agreement with the United Mine Workers. 

Major conflicts of this period, which marked the recent 
high tide in steel strikes up to the date this book went to 
press, were in Ambridge, Pa. where between 5,000 and 
6,000 were out in the plants of the National Steel Co. in 
Weirton and Clarksburg, W. Va., and Steubenville, Ohio 
13,000 involved at the plant of Standard Forgings Co. at In- 
diana Harbor, at the Republic Steel plant at Youngstown, and 
at other metal plants chiefly in Pennsylvania and New York. 

These strikes demonstrated the ability of the workers to 
fight and organize in decisive sections of the industry. They 
threatened the whole compulsory arbitration apparatus of the 
Roosevelt-NRA regime. Although some of them ended in 
temporary failure, they all left the workers in a more ex- 


perienced position to press on later against the low standards 
set up in the steel code. The militancy of the workers in 
these strikes was one of the most encouraging signs the steel 
industry has seen for more than a decade. 

If history repeats itself, the industrial struggles of the 
year 1933 should mark the beginning of a wave of organiza- 
tion, affecting the lower-paid workers in American industry, 
which would last for several years and carry both the degree 
of organization and the revolutionary consciousness of the 
workers to higher levels than were reached in 1886, 1903, or 

Much more is involved in this prospective wave of or- 
ganization than was involved in any previous wave. At no 
time in the last hundred years, not even in 1919-20, has the 
world been more torn with social strife or so ready for a 
fundamental change. The antagonism of the worker toward 
the capitalist class has been held in check by deliberate brutal 
suppression throughout the most complete economic break- 
down in American industrial history. It has reached an 
intensity which is faintly indicated by recent violent out- 
breaks in the mine fields. At the same time the lower-paid 
workers have emerged more and more as the decisive strata 
of the American working class. The conservatism of the 
older generation of skilled workers is disappearing as ma- 
chinery takes over skilled jobs and the better-paid workers 
are forced into lower-paid positions or laid off altogether. 

When they turn to seek organization and power, the steel 
workers are confronted with a choice between two national 
unions, each representing a distinct social philosophy. Of the 
two, the Steel & Metal Workers Industrial Union is in 
spite of its youth the better fitted by policy, structure and 
personnel to lead the steel workers in their struggle. The 
outcome of this struggle is of fundamental importance not 
only to the steel workers and their families but to the whole 
American working class. 



1. Sources of the wage figures are: Twelfth Census of the U. S., 
"Special Report on Employees and Wages," by Davis R. Dewey 
(1903), Table 35; U. S. Commissioner of Labor, Report on Con- 
ditions of Employment in the Iron and Steel Industry in the United 
States (1911-1913), Vol. Ill, Appendix J; U. S. Bureau of Labor 
Statistics, Bulletin 567 (1932), p. 7. 

2. Report on Conditions of Employment in the Iron and Steel Indus- 
try in the United States, Vol. I, p. xlii. See also American In- 
dustrial Conditions and Competition, edited by J. Stephen Jeans 
(London, 1902), p. 317. 

3. Charles Reitel, Machinery and Its Benefits to Labor in the Crude 
Iron and Steel Industries (Collegiate Press, 1917), pp. 1-36. See 
also article by Walter N. Polakov in The New Republic, January 

4, I933- 

4. The exact figures are : 1930 Census, laborers make up 38% of all 
gainful workers in iron and steel; 1910 Census, 48.5%. 

5. Based on Barkin's data for New York State (see p. 18, note). 
The proportion of iron and steel jobs requiring no training at all 
is probably understated in Barkin's sample, which shows 31% (as 
compared with 16.7% for all industries). Barkin's data cover 
only the smaller, less mechanized steel plants, and omit the highly 
modernized plant of the Bethlehem Steel Co. at Lacka wanna. In 
modern plants the proportion of jobs requiring no training is 
believed to be over 40%. 

6. Ernst and Hartl in The New Republic, March 12, 1930, p. 92. 

7. Monthly Labor Review, December, 1928, p. 93. 

8. John A. Fitch, The Steel Workers (New York, 1910), pp. 183- 
184, quoting Pittsburgh Dispatch, September 26, 1904. 

9. Barkin, op. cit. 

10. Fitch, loc. cit. 

11. Based on 1930 Census preliminary bulletins and 1910 Census, Vol. 
IV, Occupations, Table VI, pp. 339-340. The estimate for 1910 is 
based on the assumption that within the "21-44" age group, the 
age distribution was roughly the same as in 1930. Since the pro- 
portion under 30 was probably greater in 1910, the final estimate 
of the median age for that year is, if anything, too high. 

12. J. H. Bridge, The Inside History of the Carnegie Steel Company 
(New York, 1903), p. 81. 



13. Charles W. Coulter, The Poles in Cleveland, pp. 9-10. 

14. Kathleen Bruce, Virginia Iron Manufacture in the Slave Era, 
pp. 231-233, quoting Richmond Enquirer, June 26, 1838. 

15. "The Iron and Steel Industry of the Calumet District," Univer- 
sity of Illinois Studies in the Social Sciences, Vol. XII, No. 2 
(June, 1925), p. 93- 

16. Paul S. Taylor, "Mexican Labor in the United States: Chicago 
and Calumet Region," in University of California Publications in 
Economics, Vol. VII, No. 2 (1932), pp. 93-94- 

17. Ibid., p. 157- 


1. Monthly Labor Review, November, 1931, pp. 27-31. 

2. L. I. Dublin and Robert J. Vane, "Causes of Death by Occupa- 
tion," U. S. Bureau of Labor Statistics, Bulletin 507 (February, 
1930), p. 7- 

3. L. H. Burnett, vice-president of the Carnegie Steel Co. (sub- 
sidiary of the U. S. Steel Corp.) in address to Pennsylvania 
Safety Congress, 1928; see Safety Engineering, April, 1928, p. 

4. Bulletin 490 (1929). 

5. Monthly Labor Review, March, 1933, p. 533 ff. 

6. William Hard, "Making Steel and Killing Men," in Everybody's 
Magazine, November, 1907 ; reprinted in Injured in the Course of 
Duty (Ridgway Co., 1910), p. 13. 

7. Monthly Labor Review, March, 1933, p. 533. 

8. Burnett, op. cit. 

9. Proceedings of National Safety Congress, 1918, p. 766. 

10. Iron Age, September 9, 1926, p. 713. 

11. Arundel Cotter, United States Steel: A Corporation with a Soul, 
p. 188. 

12. Iron Age, March 13, 1930, p. 806. 

13. National Safety News, July, 1930, pp. 21-22, and letter to the 

14. August 2, 1929. 

15. The Health Study of Ten Thousand Male Industrial Workers, 
published by the U. S. Public Health Service, indicates (p. 94) 
that steel workers show an unusually large proportion of en- 
larged hearts. 

1 6. E. R. Hayhurst, A Survey of Industrial Health Hazards and 
Occupational Diseases in Ohio (Columbus, 1915), pp. 300-301. 

17. Letter from "L. N.," employee of Thomas Sheet Steel Co., sub- 
sidiary of Empire Steel Corp.; see Daily Worker, August 27, 

18. C. P. Yaglou and E. W. Miller, Journal American Society Heat- 
ing and Ventilating Engineers, July, 1924, pp. 538-539' 


19. See Dean K. Brundage, J. J. Bloomfield, and others, "Frequency 
of Pneumonia among Iron and Steel Workers," Public Health 
Service, Bulletin 202 (1932). 

20. The basis for calculation is the 1930 Census. Adjustment has been 
made for unemployment. 

21. Industrial Fatigue Research Board, "Fatigue and Efficiency in the 
Iron and Steel Industry," Report No. 5 (London, 1920), pp. 78- 

22. U. S. Public Health Service, Reprint 1060 of Public Health Re- 
port, 1926, p. 12; and Reprint No. 632, p. 6. 

23. U. S. Bureau of Labor Statistics, Bulletin 507 (1930), p. 47. 


1. U. S. Commissioner of Labor, op. cit., Vol. Ill, pp. 82-83. 

2. Ibid., p. 220, note 2. 

3. Calculated from data in Bulletin 567 of U. S. Bureau of Labor 
Statistics, plus adjustments for wage changes. 

4. Data in this paragraph from following sources: W. Simons, 
general manager of Guest, Keen & Nettlefolds plant at Cardiff, 
communication to the writer; T. Meehan of British Iron, Steel 
and Kindred Trades Association, February, 1927; U. S. Bureau 
of Labor Statistics, Bulletin 422 (1927, pp. 35-37 and 72) ; Monthly 
Labor Review, April, 1932, p. 936, and November, 1931, pp. 182- 

5. Monthly Labor Review, June, 1927, pp. 19-28. 

6. Federated Press, Eastern Bureau, May 28, 1929. 

7. Op. cit., Vol. Ill, p. 205. 

8. Paul F. Brissenden, "Earnings of Factory Workers, 1899 to 
1927," Census Monograph X (1929), p. 219. 

9. Monthly Labor Review, September, 1932, p. 692; and August, 
1932, p. 424. 

10. See his article in Quarterly Journal of Economics, Vol. 38, pp. 
614-622, and H. R. Seager and C. A. Gulick, Trust and Corpora- 
tion Problems (New York, 1929), pp. 240-242. 

11. John R. Commons and William M. Leiserson, "Wage-Earners of 
Pittsburgh," in the volume "Wage-Earning Pittsburgh," of 
Pittsburgh Survey, conducted by Russell Sage Foundation (Sur- 
vey Associates, 1914), p. 119, note. 

12. Iron Age, September 10, 1931, p. 711. 

13. Eugene M. Lokey in New York Times, August 2, 1931; and 
Labor Unity, April 4, 1931. 

14. Federated Press, Pittsburgh Weekly Letter, January 4, 1932. 

15. Wall St. Journal, February 2, 1933. 

16. J. S. Robinson, "The Amalgamated Association of Iron, Steel 
& Tin Workers," in Johns Hopkins University Studies in His- 


torical and Political Science, series XXXVIII, No. 2 (Baltimore, 
1920), p. 14 and Chap. XI. 

17. Rankin, Pa.: An Inter church Survey (1920). 

18. Housing (organ of the National Housing Ass'n.), October, 1932, 
Vol. 21, No. 3, pp. 212-213. 

19. Publication No. 122 (Washington, 1922), p. 5. 

20. Figures as of 1929. Deaths do not include stillbirths. 

21. E. S. McCallum, The Iron and Steel Industry in the United States 
(London, 1931), p. 249, quoting U. S. Public Health Report 1060 
(1926), pp. 12-13. 

22. Negro Housing (Washington, 1932), p. 10. 


1. Monthly Labor Review, November and December, 1931, and 
January, 1932, articles on "Wages and Hours in Certain Depart- 
ments of the Iron and Steel Industry." 

2. Federated American Engineering Societies, Committee on Work- 
Periods in Continuous Industries, The Twelve-Hour Shift in In- 
dustry (1922), p. 15. 

3. This list of 12-hour firms was compiled by Emil M. Hartl and 
Edward G. Ernst. Summaries of their findings were published 
in The New Republic of February 19 and March 12, 1930, and in 
the Information Service of the Federal Council of the Churches 
of Christ in America, Vol. IX, No. 7 (February 15, 1930). 

4. Monthly Labor Review, June, 1930, p. 185. 

5. Journal of the Iron and Steel Institute (London, 1881), No. I, 
pp. 136-137- 

6. Fitch, op. cit., p. 93. 

7. Ibid., pp. 218-219. 

8. Federal Council of the Churches of Christ in America. 

9. C. A. Gulick, The Labor Policy of the United States Steel Corpora- 
tion (Columbia University Press, 1924), pp. 35, 37. 

10. Monthly Labor Review, June, 1930, pp. 185-187. 

11. U. S. Bureau of Labor Statistics, Bulletin 513, p. 10: "Rest 
after a change in turns is not considered relief, when the employee 
has to work a double turn or extra shift in order to obtain the 

12. Frederick W. Taylor, Principles of Scientific Management (1911), 
P. 59. 

13. Frederick W. Taylor, Shop Management (Harpers, 1911), p. 198. 

14. Carl G. Barth in Frederick Winslow Taylor: A Memorial Volume 
(Taylor Society, 1920), p. 58. 

15. Taylor, Principles, p. 74. 

16. Fitch, op. cit., p. 188. "It [the bonus] becomes an inducement to 
men in authority to drive those below them." 

17. The Metal Worker, October, 1930. 


1 8. Federated Press, Central Bureau, June 30, 1931. 
19. Interview wich Arthur Murphy, organizer of the Trade Union 
Unity League, November 29, 1930. 


1. J. F. Dewhurst, Employment Fluctuations in Pennsylvania, 1920- 
1927 (Philadelphia, 1928) ; Pennsylvania Labor and Industries 
Department, Labor and Industry Monthly Bulletin. 

2. Calculation based on returns from special unemployed census of 
January, 1931, covering 110,981 iron and steel workers, or nearly 
a fifth of the total in the industry. 

3. Calculations of Robert R. Doane, based on government figures; 
see New York Times, January i, 1933. 

4. Report on Conditions in the Iron and Steel Industry, Vol. Ill, 
p. 206. 

5. Interview with William Watt, veteran employee of Carnegie Steel 
Co., February, 1924. 

6. Calculations in this and preceding paragraphs based on unpub- 
lished figures supplied by the U. S. Census Bureau for Buffalo, 
Chicago, Cleveland, Duluth, Pittsburgh, and St. Louis, covering 
in January, 1931, 27,341 unemployed steel workers in Classes A 
and B, all in the midwestern area. The occupations covered are 
the same as those given in the last table, and include, of course, 
some workers from outside the steel industry proper just how 
many is not known. 

7. Pres. James A. Farrell before the Senate Committee on Manu- 
factures, October 29, 1931 ; see United States Daily, October 30, 

8. Labor Unity, December 13, 1930. 

9. Ibid., March 14, 1931. 

10. New York Times, March 25, 1932. 

n. Federated Press, Pittsburgh Bureau, November 26, 1931. 

12. American Federation of Labor Weekly News Service, April i, 

13. Pierce Williams and Frederick E. Croxton, "Corporation Contri- 
butions to Organized Community Welfare Service," Publication 
No. 16 of National Bureau of Economic Research (1930), p. 150. 

14. Ibid., p. 153- 


I. These figures, based on census and trade publications statistics, 
are the most recent available on productivity. They do not cor- 
respond at all with the figures of the U. S. Bureau of Labor 
Statistics for the earlier years. See Monthly Labor Review, 
November, 1932, p. 1036, for summary. However, all statistics 


agree that there has been a marked increase in productivity and 
that this increase is still continuing 1 . 

2. Monthly Labor Review, June, 1928. 

3. Ibid., December, 1926, p. 33. 

4. Calculated from Statistics of the Iron and Steel Industries, 1931, 
published in London by the National Association of Iron and 
Steel Manufacturers. 

5. Herbert Feis, Europe, The World's Banker (1870-1914), p. 127, 
quoting from Debats Part., Chambre des Deputes, January 13, 

6. Journal Officiel, February 12, 1932, p. 572$". (Chambre des 
Deputes, seance du n fevrier). Speech by Paul Faure, deputy 
from Le Creusot. 

7. Clyde H. Tavenner, The Navy League Unmasked, p. 24. 

8. Ibid. 

9. See also Jan Relling, "The Political Connections of the Interna- 
tional Armament Firms," in The Communist (New York), June, 
IQ33. PP- 586-587; also, and especially, Lenin's introduction to 
Imperialism and World Economy, by N. I. Bukharin (Interna- 
tional Publishers, 1929). 

10. J. Viner, Dumping (University of Chicago Press, 1923), pp. 84- 

11. Ibid., p. 135. 

12. The First Twenty Years, published by the American Rolling Mill 
Co. (1922), p. 31. 

13. Malcolm Keir, Manufacturing, in Industries of America series 
(Ronald, 1929), p. 175. 

14. Census Bureau, Location of Manufactures, 1899-1929 (1933), pp. 
47, 65. 

15. Article by John D. Knox in Steel, March 13, 1933. 


1. U. S. Bureau of Labor Statistics, Bulletin 499 (1929), p. 66. 

2. On all types of forced labor see Walter Wilson, Forced Labor in 
the United States (International Publishers, 1933). 

3. J. P. Shalloo, "The Private Police of Pennsylvania," in Annals 
of the American Academy, Vol. CXLVI, No. 235 (November, 
1929), P. 59- 

4. An excellent first-hand account of life in Aliquippa is given by 
Charles R. Walker, Jr., in Steel: The Diary of a Furnace 

5. Amos Pinchot, "Walter Lippmann : I. The Great Elucidator/ " in 
The Nation, July 5, 1933, p. 9. 

6. See "A Substitute for Lynching," in The Nation, January i, 1930, 
pp. 12-14. 


7. Letter from Joseph Ballet, Jr., organizer of the S.M.W.I.U., 
May 3, 1933- 

8. U. S. Commissioner of Labor, op. cit., Vol. Ill, pp. 448-449, quot- 
ing Hearings before Stanley Committee, p. 4164. 

9. Edward Bemis in Journal of Political Economy, Vol. II, p. 372. 

10. McCallum, op. cit., p. 273, quoting P. F. Gemmill, Present-Day 
Labor Relations (1926), p. 98. Besides the companies mentioned 
in the text, the following are known to have instituted company 
unions: Republic Iron and Steel Co. (now part of Republic 
Steel Corp.), in its Youngstown plant; Wheeling Steel Corp. 
(plan established 1921), Inland Steel Co., Commonwealth Steel 
Co., and American Rolling Mill Co. The Hydraulic Steel Co., 
dissolved in 1928, also had a company union. 

11. Ibid., p. 278, quoting Prof. Paul H. Douglas. See also Robert 
W. Dunn, Company Unions (Vanguard, 1927), especially Ch. VI. 

12. Interview with Clyde L. Brading, director of labor and safety at 
Wisconsin Steel Co. plant, August 21, 1928. 

13. Art. i, Sec. 3 (draft of 1923). 

14. They Told Barron, edited by Pound and Moore (1930), p. 82. 

15. See (e.g.) "Organize the Unorganized" (pamphlet), Labor Her- 
ald Library, No. 17, p. 21 ; article "Company Unionism and Trade 
Unionism," in Workers Monthly, January, 1926 ; and (especially) 
article "Company Unions," in Workers Monthly, September, 1925. 
All are written by Foster. 

16. Robert W. Dunn, The Americanization of Labor, p. 237, quoting 
Proceedings of the National Association of Manufacturers, 1924, 
p. 97. 

17. McCallum, op. cit., p. 284. 

18. New York Times, April 30, 1933. 

19. See on pensions Murray W. Latimer, Industrial Pension Systems 
(Industrial Relations Counselors, Inc., 1933). 

20. See Bill Dunne in Daily Worker, Sept. 2, 1933. 

21. The estimates in this paragraph have been made by the writer on 
the basis of figures supplied by Industrial Relations Counselors, 

22. The New Republic, March 12, 1930, p. 92. 

23. Equitable Life Assurance Co., Agency Items, July 15, 1929. 

24. Ibid., June 3, 1929. 

25. Pierce Williams, "The Purchase of Medical Care through Fixed 
Periodic Payments," Publication No. 20 of National Bureau of 
Economic Research (1932), pp. 133-137. 

26. MS. report in the writer's possession. See also the author's arti- 
cle in Common Sense, July, 1933. 

27. F. L. Palmer, Spies in Steel. 

28. Sidney Howard and Robert W. Dunn, The Labor Spy (Republic 
Publishing Co., 1924), Chap. I. 

29. Frank L. Palmer in Labor Age, December, 1929. 


30. Cf. Abraham Epstein's article in The New Republic, April 6, 
IQ27, P. 193- 

31. Joseph Freeman, The Soviet Worker (International Publishers, 


1. Fifteenth Census of the U. S., Manufactures: 1929, Vol. II (1930), 
P. 3- 

2. Cf. National Bureau of Economic Research, Recent Economic 
Changes, 1929. I, p. 175. 

3. Ibid., p. 178. 

4. Iron Age, July 4, 1929, p. 36. Figures here and later as of 
January i, 1929. 

5. See Reports of the National Monetary Commission, U. S. 6ist 
Congress, 2nd Session, Senate Document 538, p. 274. 

6. Edmund Newton in Steel, November 21, 1932, p. n. 

7. Steel, January 4, 1932, p. 126. 

8. R. H. Sweetser in Steel, January 2, 1933, p. 74. 

9. Willard L. Thorp, Census Monograph III (1924), p. 245. 

10. Ibid., p. 244. 

11. Fraser and Doriot, Analysing Our Industries, p. 252. 

12. Stanley Committee, Report, 1912, p. 4. 

13. V. I. Lenin, Imperialism, the Highest Stage of Capitalism (Inter- 
national Publishers, 1933). 

14. Fetter, The Masquerade of Monopoly (Harcourt, Brace, 1931), 
pp. 128-129. 

15. See Wall Street Journal, December 17, 1932. 

16. Fetter, op. cit., p. 173, quoting Docket 962 of Federal Trade 
Commission, testimony of Hugh E. White. 

17. Congressional Record, Vol. XLIX, Part 5, 62nd Congress, 3rd 
Session, p. 4317 (February 28, 1913). 

18. Annual Report of the Secretary of the Navy for 1916, p. 21; 
for 1917, p. 56. 

19. Report of the Secretary of the Navy on Cost of Armor Plate, 
December 31, 1896, Senate Document 147, 55th Congress, 2nd 

20. F. C. Howe, Why War? (Scribner's, 1916), p. 139 ; G. H. Ferris, 
The War Traders (London, 1914), p. 60. 

21. William Notz in American Economic Review, Vol. XIX, No. I 
(March, 1929), p. n. 

22. Iron Age, February 2, 1928, p. 3416. 

23. Amos Pinchot in The Nation, July 5, 1933, p. 9- 

24. U. S. Reports, Vol. 251, p. 453 ff. 

25. E. C. Eckel, Coal, Iron and War (New York, 1920), p. 223. 

26. Steel, January 4, 1932, p. 146. 



1. H. B. Summers, "A Comparison of the Rates of Earning of 
Large-Scale and Small-Scale Industries," in Quarterly Journal of 
Economics, Vol. XLVI (May, 1932), pp. 465-479. 

2. Fourteenth Census (1920), Vol. XI, p. 349. 

3. Statement of Peter Shields, representative of Josiah V. Thompson, 
banker and coal operator. See More They Told Barron, pp. 221- 

4. Senate Document 147, 55th Congress, 2nd Session (1896), p. 80. 

5. R. H. Stimson, The Control of the Manufacture of Armament 
(Abstract of thesis, University of Illinois, 1930), p. 6. 

6. Compiled from figures in War-Time Profits and Costs of the 
Steel Industry, Report by the Federal Trade Commission (Wash- 
ington, 1925), p. 137- 

7. House Committee on Military Affairs, Hearings, 68th Congress, 
ist Session (1924), p. 162. 

8. The Secret International: Armament Firms at Work (Union of 
Democratic Control, London, 1932), p. 35. 

9. House of Representatives Executive Document 160, 53rd Congress, 
2nd Session (1894). 

10. "The World Wide War Trust," speech by Clyde H. Tavenner of 
Illinois in House of Representatives, February 25, 1915, p. 28. 

11. Lord Jellicoe in London Daily Herald, October u, 1930. 

12. Hearings before the War Policies Commission (1931), p. 323. 

13. More They Told Barron, p. 223. 

14. Statement of Charles M. Schwab. See article by Earl Sparling 
in the New York World-Telegram, June 2, 1931. 

15. John T. Flynn, Graft in Business (Vanguard, 1931), pp. 195-196. 

1 6. More They Told Barron, p. 218. 

17. Flynn, op. cit., pp. 208-209. 

18. Noyes, Forty Years of American Finance (Putnam's, 1909), pp. 

19. Ida M. Tarbell, The Life of Elbert H. Gary: The Story of Steel 
(Appleton, 1925), p. 75 ff. 

20. Henry H. Klein, Dynastic America and Those Who Own It (pub- 
lished by author, 1921), p. 54. 


1. Annual Report of the Secretary of Internal Affairs of the Com- 
monwealth of Pennsylvania, Part III, Industrial Statistics, Vol. 
VII, 1878-1879, p. 150. 

2. Ibid., p. 151. 

3. See Fitch, op. cit., p. 81. 

4. Robinson's estimates ; see Johns Hopkins Studies, op. cit., p. 19. 


5. Ffouse of Representatives Report 2447, pp. 107-108, testimony of 
W. T. Roberts. 

6. E. W. Bemis, "The Homestead Strike," in Journal of Political 
Economy, Vol. II (June, 1894), pp. 372-373. 

7. On the Homestead Strike see further the author's article, "Home- 
stead: July, 1892," in Labor Defender, July, 1933, p. 17. 

8. Journal of Political Economy, loc. cit., p. 370. The strike of 
1889 at Homestead had been caused because Carnegie, Phipps & 
Co. proposed to reduce wages to the eastern level. (American 
Manufacturer, May 24, 1889.) 

9. U. S. Industrial Commission, Hearings and Testimony, Vol. VII 
(1900), pp. 85, 382. On suggestion of the A. F. of L., the tin- 
house workers' union was merged into the Amalgamated Associa- 
tion in 1913. 

10. New York Tribune, August u, 13, 15-17, 1901. 

11. Senate Hearings on the steel strike of 1919, p. 342. 

12. Amalgamated Journal, November 4, 1909, quoting Steubenville 
Daily Gazette and Herald Star. 

13. "Strikes and Lockouts," Twenty-first Annual Report of the 
(U. S.) Commissioner of Labor, 1906, pp. 486-487. 

14. Interview with Pres. M. F. Tighe of the Amalgamated Associa- 
tion, March, 1929. 

15. Ibid. 

16. See S. D. Spero and A. L. Harris, The Black Worker (Columbia 
University Press, 1931), Chapter XL 

17. Ibid., pp. 251-252, quoting Pres. M. F. Tighe of the Amalgamated 
Association. In this instance, the central organization revoked the 
charter of the white workers in the down-river local after it was 
too late. 

18. John A. Fitch, "Steel's Lost Labor Leaders," in Labor Age, 
January, 1923, pp. 4-5. 

19. On the tariff see John Jarrett, "The Story of the Iron Workers," 
in The Labor Movement, The Problem of To-day, edited by 
George E. McNeill (New York, 1888), p. 287. 

20. H. E. Hoagland, "Wage Bargaining on the Vessels of the Great 
Lakes," in University of Illinois Studies in the Social Sciences, 
Vol. VI, No. 3 (1917), p. 49. 

21. See D. J. Saposs, Left Wing Unionism (International Publishers, 
1926), pp. 138-141. 

22. The New Republic, article by George P. West, September 2, 1916, 
p. 109. 

23. See Bill Haywood's Book (International Publishers, 1929), pp. 

24. See Amalgamated Journal, June 9, 1910; U. S. Bureau of Labor, 
Report on Strike at Bethlehem Steel Works (1910) ; and U. S. 
Commission on Industrial Relations, Hearings, Vol. XI, p. 10612, 
testimony of Harry A. Cyphers, lawyer, of South Bethlehem. 


25. Special report by Cleveland students, based on files of Youngstown 
Evening Telegram, interview with Tom Gordon, leader-partici- 
pant, and J. G. Butler's History of Youngstown and the Mahon- 
ing Valley (1921), Vol. I, especially pp. 242-243. 

26. Lewis L. Lorwin, The American Federation of Labor: History, 
Policies, and Prospects (Brookings Institution, 1933), p. 134, 
note i. 

27. Interviews with eyewitnesses, John Urban and Sam Watt. 


1. Wm. Z. Foster, "An Open Letter to John Fitzpatrick," in Labor 
Herald, January, 1924, p. 6. 

2. Interchurch World Movement, Commission of Inquiry, Report 
on the Steel Strike of 1919 and Public Opinion and the Steel 
Strike; William Z. Foster, The Great Steel Strike and Its Les- 
sons; Monthly Labor Review, December, 1919, pp. 79-94; U. S. 
Senate, Hearings on the Steel Strike, especially pp. 478, 503; 
Amalgamated Journal, Vol. XXII, Nos. i-io. 

3. Foster's figure is probably closer to the truth than that of the 
U. S. Bureau of Labor Statistics, which afterwards put the num- 
ber of striking iron and steel workers at 367,000. Some coal 
miners (Johnstown), iron miners (Birmingham) and workers in 
finishing plants such as the Mesta Machine Works at Homestead, 
are included in Foster's total. (See Monthly Labor Review, June, 
1920, p. 200, and Foster, The Great Steel Strike, p. 191.) 

4. Senate Hearings, 1919, p. 1050. 

5. Foster, The Great Steel Strike, preface to 2nd ed., p. iii, note i. 

6. Ibid., p. 1 80. 

7. Amalgamated Journal, Vol. XXII, No. 10, p. i. 

8. See Hearings before the Committee on Education and Labor, 
U. S. Senate, 69th Congress, ist Session, on proposed investiga- 
tion of wages and working conditions in certain industries (1926), 
p. 29. 

9. Robinson, op. cit., pp. 20, 21 ; Financial Statement of the Interna- 
tional Lodge, A.A.I.S.T.W. of N.A., for quarter ending Septem- 
ber 30, 1932, p. 6; L. Wolman, The Growth of American Trade 
Unions, 1880-1923, pp. 112-113. 

10. Concluding speech by Lozovsky, in RILU Magazine, Vol. II, 
No. 3 (February 15, 1932), p. 244. 

11. A. Lozovsky, "The Fifth RILU Congress," in the Red Interna- 
tional of Labour Unions, Vol. II, Nos. 7 and 8 (November and 
December, 1930), p. 241. 



(Source: Joint Occupation Study of the Actuarial Society of 

America and the Association of Life Insurance Medical 

Directors, New York, 1929) 

Ratio of iron and 
steel workers' 
deaths to average 
deaths of all men 

of same age 
Occupation in iron and steel works 

Laborers 227% 

Cranemen, derrickmen and hoistmen 186% 

Mechanics 184% 

Stationary engineers and firemen 161% 

Furnacemen, puddlers, etc 144% 

Semi-skilled operatives in blast furnaces, open hearths 

and rolling mills 135% 

Semi-skilled operatives in not specified works 132% 

Semi-skilled operatives in wire mills 108% 

Rollers and roll hands io&% 

Machinists 90% 

Workers in by-product coke ovens 122% 


(A) For Iron and Steel Plants and for Median of All Industries, 
Pennsylvania, 1932 

(Source: Pennsylvania Manual of Compensation Insurance f 


Premiums per 
$100 of payroll 

Blast furnace operation (except office and salesmen) . . $2.45 
Steel making: open-hearth furnaces and Bessemer 

converters 2.00 

Steel making : electric furnaces 2.00 

Rolling mills : not otherwise classified 2.00 



Premiums per 

$100. of payroll 
Rolling mills: bolt and nut, nail and pipe, and horse 

shoe manufacturing $1.70 

Rolling mills: tube or pipe (including iron puddling, 

not including cast iron pipe) 1.60 

Median (middle one) of all industrial divisions, in- 
cluding coal mining 1.35 

Sheet rolling mills 1.30 

(B) For Iron and Steel in Relation to All Industries, All 
Other States (except Ohio and West Virginia) 

(Source: National Council on Compensation Insurance, 1932) 

Relative Premium 

for Compensation 

Insurance (All 

Industries = 100) 

Industrial Classification 

Blast furnaces 461 

Steel works 207 

Rolling mills 210 

All Industries 100 

(Note: The figures of the Pennsylvania Manual and of the Na- 
tional Council show the hazard of the industry as somewhat higher, 
relatively to large-scale industries, than it actually is, because these 
compilations do not include the self -insurers. Most of the large com- 
panies are self -insurers, and it is the large companies that have the 
lowest accident rates. The tables may fairly be taken to represent 
the hazard of small-scale iron and steel plants relatively to that of 
other small-scale firms.) 


(Source: Code of Fair Competition of the Iron and Steel 
Industry, Schedule E) 

Minimum Rates 

of Pay for 
Common Labor, 
Cents per Hour 

i.~ Eastern District 35 

2. Johnstown District 37 

3- Pittsburgh District 40 

4. Youngstown Valley District 40 


Minimum Rates 

of Pay for 
Common Labor, 
Cents per Hour 

5. North Ohio River District ,. 40 

6. Canton, Massillon and Mansfield District 37 

7. Cleveland District 40 

8. Buffalo District 38 

9. Detroit-Toledo District ,. . . . 40 

10. South Ohio River District 37 

ii. Indiana-Illinois-St. Louis District 37 

12. Chicago District 40 

13. Southern District 25 

14. Birmingham District 27 

15. Kansas City District 35 

16. Duluth District 37 

17. Colorado District 40 

18. Utah District 39 

19. Seattle District 38 

20. San Francisco District 37 

21. Los Angeles District 35 


Figures on iron and steel wages are published currently by the 
National Industrial Conference Board, the Census of Manufac- 
tures, the U. S. Bureau of Labor Statistics, and some state 
bureaus. All of these statistics should be used with great cau- 

(1) The National Industrial Conference Board is an em- 
ployers' research organization, and gets its figures direct from 
employers, by questionnaire. Its figures on hourly earnings in 
iron and steel come mainly from U. S. Steel Corp. plants in the 
Chicago area. (Paul H. Douglas, Real Wages in the U. S. f 
1890-1926, p. 183.) It gives a figure that is much too high for 
the industry as a whole, since Chicago is a high-wage center 
compared with the whole country. 

(2) The reports of the Census of Manufactures (biennial 
since 1919, quinquennial, 1899-1919) give total wages and aver- 
age number employed, but do not compute average wages. 

(3) The U. S. Bureau of Labor Statistics publishes figures 
on earnings, taken direct from the payrolls of the companies, 
about every two years. It computes "full-time weekly earn- 
ings." It also publishes each month "per capita weekly earn- 


ings," but without defining exactly what workers are included in 
the compilation. 

(4) State bureau figures are not any more complete than the 
figures of the federal bureau just mentioned, and are probably 
not so carefully compiled. 

Paul H. Douglas, in his Real Wages in the United States, 
1890-1926, rushes in where the Census Bureau fears to tread 
and computes "average wages" from the Census of Manufac- 
tures figures. Even employers hesitate to do this. 

Neither the Census Bureau nor Douglas has found any ade- 
quate way of providing for the stagger system, which had begun 
to be widespread before the end of the period included in 
Douglas' study. Douglas* figures on per capita earnings of steel 
workers are probably too high. His methods and results have 
been further criticized by A. H. Hansen (American Economic 
Review, December, 1930, pp. 747-752), Leo Wolman (Quarterly 
Journal of Economics, February, 1932, pp. 398-406) and Murray 
W. Latimer (Journal of the American Statistical Association, 
December, 1930, pp. 479-485). 

Paul F. Brissenden, in his "Earnings of Factory Workers, 
1899 to 1927" (Census Monograph X, 1929), correctly rejects 
the "census average wage" as a measure of earnings per capita, 
but he seems to fall into another error in assuming that fluctua- 
tions in production are reflected in corresponding fluctuations in 
employment over long periods of time. Other difficulties with 
Brissenden's results have been pointed out by Douglas (op. cit. f 
PP- 593-6o8). 

Leo Wolman is engaged, at the time of writing, in working 
over the available wage figures according to a method of his 

The United States Steel Corporation publishes annually figures 
on the number of employees in each of its several departments, 
and the total wages and salaries. The company does not publish 
separately the figures for wage-earners, and it is impossible to 
tell how many bosses and salaried workers are lumped with the 
wage workers in its calculations of "average earnings per em- 
ployee per day: all employees exclusive of general administra- 
tive and selling force"; yet even so this average was only |5-8o 
in 1930, and in the following year was not even calculated. 
(Annual Report of the U. S. Steel Corp. for 1930, p. 10.) 

Nobody needs to take too seriously what the companies say 
about the wages they pay, because their own statements are at 


times contradicted by the government statistics, and at other 
times, by officials from other companies. At still other times, 
statements put out by the same company contradict each other. 
Examples are given below. 

(1) Company vs. government statistics. Charles M. Schwab 
told the Stanley committee investigating the U. S. Steel Corp. 
in 1911, that the average earnings of an employee of the Bethle- 
hem Steel Corp. were about |i,ooo a year. (Stanley Committee 
Hearings, Vol. 2, pp. 1305-1306.) The federal Bureau of Labor 
had shortly before completed an investigation of the company's 
South Bethlehem plant which showed that an employee working 
72 hours a week for 52 weeks in the year the median full-time 
hours at the Bethlehem plant and earning the median wage (16 
cents an hour) could make not quite $600 a year. (Report on 
Strike at Bethlehem Steel Works (1910), pp. 12, 60.) 

(2) One company vs. another. Schwab thought that the earn- 
ings in U. S. Steel were about the same as in Bethlehem, i.e., 
according to his figures, $1,000 a year. But the figures in the 
annual reports of U. S. Steel for that period give an "average 
wage" of a little over $800. (Gulick, Labor Policy of U. S, 
Steel Corp., p. 57.) As already explained, this figure probably 
includes some salaried employees, and is much more nearly a 
computation of earnings per full-time job, than of earnings per 

(3) A company vs. itself. In 1919 Gary told the U. S. Senate 
that 46,638 of the U. S. Steel Corp. employees were getting the 
common labor rate, referring to manufacturing companies. About 
the same time he told the Interchurch World Movement Com- 
mission of Inquiry that 70,000 men received that rate. He never 
cleared up the discrepancy. (Ibid., pp. 79-80.) 

In any district, the lowest wages are paid by small firms in 
small plants, usually not the best equipped or most up-to-date. 
But the firms paying the highest wages are not necessarily either 
the largest firms or the firms operating the largest plants. 

Where wages are relatively high, there output per worker is 
high, and where wages are low, output per worker is low. 
(Monthly Labor Review, August, 1932, p. 263, Table 3.) This 
does not prove, of course, that output is high because highly 
paid labor is more efficient than low-paid labor, since equipment 
is far more important than the efficiency of labor in determining 


(a) April, 1930 

We here describe the steps by which we have arrived at the 
results given in the text. Since the final count (Census, 1930) 
of the women in the heavy industry differed materially from that 
in the unemployment census, we have not attempted to calculate 
the extent of unemployment among females, who are insignificant 
in number compared with the males. 

The unemployment census listed 605,242 males in blast fur- 
naces and steel [and] rolling mills, which compares with 602,358 
in the final count. The difference is slightly less than one-half 
of one per cent. The number of unemployed as reported in the 
census must of course be reduced in this degree. Of the total, 
the census showed 87,200 "white collar" workers and bosses 
(employees in proprietory, official, supervisory, professional, and 
clerical and kindred pursuits). Allocating to the heavy iron and 
steel industry its proportional share of the male employees in 
unemployment Classes C and D as given in the decennial census, 
we get, in round numbers, 5,600, unable to work. Subtracting, 
we find 599,600 able to work. Of these, 63,000 in round num- 
bers were unemployed (Classes A, B, and E plus proportionate 
share of omitted entries).* 

A few (though not many) of the "white collar" workers and 
bosses were unemployed or unable to work at the census date, 
which it will be remembered antedated the beginning of the acute 
crisis in steel. At the same time, a certain number of steel 
workers were "on the bum" searching for work, and escaped the 
census count altogether. These two factors have to be set against 
each other, but there is no good way of estimating the size of either. 
We believe that the second factor was of at least as great im- 

* Class A 36,166 

B 24,947 

E 1,005 

omitted 1,200 




portance as the first, and therefore have allocated the whole 
number of the unemployed to the wage-earning group. We then 
have the following computation: 

(April, 1930) 

White collar 
workers and 
Wage-earners bosses Total 

Total 518,000 87,200 605,242 

Unable to work 4,800 800 5,600 

Able to work 513,200 86,388 599,642 

Unemployed 63,000 63,000 

Per cent unemployed (see above) 12.3% 

This computation contains certain doubtful elements, but is 
probably accurate within 10%. 

(b) April i, 1933 

The estimate for the later date is much more hazardous and 
involves several important assumptions which cannot be checked. 
We do not know how many steel workers have died or retired. 
We also cannot tell how many boys in the steel towns have 
arrived at working age without being able to get any job in the 
mills, though under any but crisis conditions they would un- 
doubtedly have done so. These youths are to all intents and 
purposes unemployed, though they are not so listed in some 
computations. We have included them with the unemployed, 
and assumed that their number about balances the number of 
workers who have died and retired. We have also assumed that 
the number unable to work has remained constant. The net 
movement out of the industry due to the crisis may be put 
conservatively at 3,200. (Based on American Iron and Steel 
Institute, Statement of Employment Conditions and Rate of 
Operations in the Steel Industry, submitted at steel code hearings 
of National Recovery Administration, July 31, 1933.) Our 
estimate is then as follows: 



Male wage-earners at work April, 1930 450,200 90.8* 

Male wage-earners at work in 1929 (average) 94-7* 

Male wage-earners at work in 1931 (average) 62.9** 

Male wage-earners at work in April, 1933 46.0** 

Decline in employment April, 1930, to April, 1933... 49-3% 

Number thrown out of work in 3-year period 221,950 

Add : unemployed in April, 1930 (see above) 63,000 

Subtract : Net movement out of the industry 3,200 

Total unemployed, April, 1933 281,750 

At work, April, 1933 (including part-time workers) . 223,250 

Available for work, April, 1933 505,000 

Per cent totally unemployed, April, 1933 55-8% 

We are able to check this estimate at one point with the 
companies' own statistics. Our figure for the decline in em- 
ployment from 1931 (ave.) to 1932 (ave.) is 20%. The 
steel companies, especially the largest, made much ballyhoo dur- 
ing 1932 about the way they were keeping their workers on the 
job by means of the stagger system. Yet the annual reports of 
U. S. Steel and Bethlehem Steel show a combined net decline in 
men on the payrolls from 1931 to 1932 of 24%, or at a rate 
a fifth higher than we have allowed for the whole industry. 


"Capacity" is an elastic term, and figures on capacity are often 
underestimates. The American Iron & Steel Institute gives 
figures on "theoretical capacity." These figures supposedly 
represent a top limit, which could never be exceeded for a long 
period, such as a year. Since the whole steel industry ran for 
several months at 98% of "capacity" in 1929, we are entitled to 
question whether "capacity" had been accurately estimated. In 
the production of steel sheets, the demand for which has ex- 
panded rapidly, production exceeded "capacity"* in September, 
1928, and for nine out of the eleven following months; in 
March, April and May, 1929, the production averaged over 
115% of "capacity." For a period following the installation 
of the new continuous process for rolling sheets, the Ashland, 

* U. S. Bureau of Labor Statistics, Trend of Employment. 
** Same, corrected by reference to Census of Manufactures. 


Ky., mill of the American Rolling Mill Co. operated at 125% 
of capacity. (Wall Street Journal, May 20, 1929.) These 
tremendous excesses over the supposed maximum give some 
idea of the caution that must be used in interpreting figures of 
capacity. According to Steel, the tendency is for these figures 
to understate capacity in times of industrial expansion and to 
overstate capacity in times of depression. (Cf. Steel, Novem- 
ber 7, 1932.) 

In pig iron production, not more than 90% of the total theo- 
retical "capacity" (as denned in Annual Statistical Report of the 
American Iron and Steel Institute for 1925, p. vi) has been used 
at any one time since the system of reporting capacity was 
revised in 1925. In steel ingot production, "capacity" is geared 
to peak demand almost exactly, and in May and June, 1929, the 
industry operated at 100% of capacity. In the production of 
rolled products, on the other hand, there is admittedly over- 
development, due to the multiplicity of products and the multi- 
plicity of markets which they supply. Underemployment is much 
more serious in this branch of the industry than in blast fur- 
naces and steel mills. The Iron Age estimates that rolling mill 
capacity has been "normally" 25% in excess of peak demand, 
and during 1930 the excess reached 35 or 40%. (January 14, 
1932, p. 195.) That is, the first year of the crisis, instead of 
doing away with excess capacity (through junking, etc.) actu- 
ally increased it ! 

It has recently been argued (by the National Industrial Con- 
ference Board, boss research organization; see its Conference 
Board Bulletin, June 20, 1932) that the apparent capacity, e.g., 
in rolling mills, is not real because obsolescence so quickly does 
away with excess capacity. If this argument were sound, then 
nearly all the joblessness in blast furnaces and rolling mills could 
be attributed, like that in steel ingot production, to cyclical fluc- 
tuations. However, from the point of view of the workers who 
hang around a closed mill in the hope that it may some day open 
again, the argument is not sound unless one assumes that the 
workers are also obsolescent! 

*As calculated by the National Association of Flat Rolled Steel 
Manufacturers. Data from "Industrial Overcapacity: Source Mate- 
rial," mimeographed sheets compiled by Robert F. Martin of the 
Division of Economic Research, U. S. Bureau of Foreign and Domes- 
tic Commerce, August, 1932. 




(Not including those employing less than 1,000 wage-earners) 

(Source: Compiled from Census of Manufactures, 1927, 
pp. 1316-1329) 

Wage-earners * 

(average for 
Industry and Branch the year) 

Manufactured ice 22,120 

Cement 36,322 

Copper smelting and refining 

Compressed and liquefied gases 

Coke, not including gas-house coke 

Flour and other grain-mill products .... 

Paper and wood pulp 

Beet sugar 

Blast furnaces, steel works and rolling 
mills . 














* Total of those employed on the 15th day of each month, divided 
by 12. 


(Source: Census of Manufactures} 

Wage-earners per establishment 

No. of 




Blast and 


fur- rolling 


naces mills 

IOOO. . 

208 446 


ArVKJ H i T V -' 
I 60 427 

1010. . 

105 "toO 


^VO j^J^J 

122 A.T\ 

1020. . 


10=; 486 






























1 00.0 













1929-30 and July I, 1933 

(Source: American Iron and Steel Institute, Statement of Em- 
ployment Conditions and Rate of Operations in the Steel 
Industry, submitted to National Recovery Adminis- 
tration at steel code hearings, July 31, 1933) 

Total number of 

Actual average employees being 

number of em- given some work 

ployees, years on or around 

Company 1920 and 1030 July i, 1033 

U. S. Steel 139,622 115,466 

Bethlehem Steel 43,679 33,848 

Republic Steel 22,322 19,349 

Jones & Laughlin Steel 16,753 14,439 

Youngstown Sheet & Tube 15,931 13,873 

American Rolling Mill 9,477 8,287 

National Steel 13,158 14,689 

Inland Steel 6,824 6,231 

Wheeling Steel 1 1,043 12,633 

Colorado Fuel & Iron 6,246 2,696 

Crucible Steel 8,022 5,358 

Corrigan-McKinney Steel 3,223 3,187 

Newton Steel 2,639 1,293 

Otis Steel 3,685 4,034 

Pittsburgh Steel 5,962 4,998 

Gulf States Steel 2,157 2,152 

Roebling's Sons 4,464 3,225 

Spang-Chalfant 3,102 2,289 

International Harvester 2,800 1,936 

Granite City Steel 2,278 2,360 

McKeesport Tin Plate 2,870 2,876 

Sharon Steel Hoop 1,983 2,008 

Newport Rolling Mill 1,403 1,009 

Continental Steel 2,409 2,333 

Acme Steel 1,627 1,488 

Lukens Steel 2,000 1,534 

Byers (A. M.) i,49i 1,009 

Keystone Steel & Wire 1,196 1,147 

Central Iron & Steel 811 779 

Phoenix Iron 857 662 

Laclede Steel 918 1,192 

Worth Steel 702 565 

Total 341,654 288,945 



Professor A. S. Dewing, formerly of Harvard, has tried to 
prove that the profitableness of combinations, including the U. S. 
Steel Corp. has been less than the profitableness of the companies 
that preceded the consolidations. He gives figures to show that 
yearly profits of the companies that went into U. S. Steel were 
$108,000,000, whereas U. S. Steel profits averaged only $93,000,- 
ooo in the first ten years of the combine's existence. (See Quar- 
terly Journal of Economics, November, 1921, pp. 95-96.) 

There are several things to note about this calculation. In the 
first place, the figure of $108,000,000 is an unchecked estimate 
by the Commercial and Financial Chronicle; several of the com- 
panies that joined U. S. Steel published no statements. In the 
second place, the figure refers to a boom year, 1900, when profits 
were fabulous. In the third place, competition was not active in 
that year; all the principal products were cartelized in 1900, and 
monopoly prices were already being charged. And in the fourth 
place, the "profits" of U. S. Steel for the first ten years as cal- 
culated by Dewing do not include "profits plowed under" which 
were only disclosed by the company many years later. 

But even if Dewing's point could be taken as proved which 
we deny it would not be a significant point; in fact, it would 
leave the argument just where it was. The United States Steel 
Corp. was formed to prevent competition and insure monopoly 
profits; and it has succeeded in performing this task. 


In order to show the return to the original investor it would 
be necessary to go back to the founding of the company. This 
procedure would be impossible and meaningless. All or nearly 
all the principal companies are reorganizations of earlier com- 
panies, many of which did not publish reports, and practically 
all of which were founded before the day of investors now 
living. We therefore take as the real original investment the 
sum supposed to represent the actual value of the properties at 
an arbitrary date. In the case of U. S. Steel, this date is 
April i, 1901, the date when the company started operations. 
For the other companies, and for the consolidated analysis, the 
date is January i, 1905, the earliest date at which reports of all 
four companies become available. 


The average real investment is found by adding to the original 
real investment all tangible additions to capital made from out- 
side the business after the original date, then dividing by the 
number of years covered. Stock dividends do not represent any 
new investment from outside the industry; they represent merely 
surplus kept permanently in the business. Therefore additions 
to stock through the issuance of stock dividends cannot be con- 
sidered additions to the real investment. 

Nominal investment is defined as the stated figure given by 
the companies in their capital set-up. Watered stock is defined 
as stock given to promoters or investors against fictitious or non- 
tangible values. 

Earnings and profit are treated as synonymous and defined as 
including all cash paid out to investors, whether in the form of 
interest or dividends, and the surplus remaining in the business, 
whether in the form of undivided profit or stock dividends or 
appropriations from surplus for some specific purpose. Earn- 
ings include both operating and non-operating income. Depre- 
ciation and taxes are allowed as deductions from profit. 

Return is defined as the cash received by an investor on his 
security; rate of return as the percentage of return on value of 
"investment," leaving the latter intact. Real rate of return is 
the percentage of return on the real investment. Nominal rate 
of return is the percentage of return on the nominal investment. 

The units chiefly related are the dollar invested in the industry 
from the outside and the dollar paid by the industry to the out- 

Surplus is strictly limited in the interpretation to earnings left 
in the business. There is one item of "paid-in surplus" in the 
U. S. Steel Corp. reports and this item was combined with other 
invested capital and treated as "investment." In the case of the 
Jones & Laughlin Steel Corp. which, although organized in 1902, 
issued no information until 1913 and then only of a fragmentary 
nature until its reorganization in 1923, the surplus reported at 
the latter date is assumed to be entirely "earned" as the stated 
capitalization in 1902 made no mention of paid-in surplus. 

Premiums and discounts on the sale of bonds are treated as 
an adjustment to "other income" and reflected in total net profit. 
Another possible method would have treated this item as 
an adjustment to investment. The latter treatment, though 
preferred, was abandoned in the face of the difficulties encoun- 
tered in the gathering of information. Furthermore the differ- 


ence in treatment would yield but an insignificant difference in 
the rates of earnings and return and these differences under the 
present treatment tend rather to minimize the rates than other- 

Most profit studies, including that of the Federal Trade Commis- 
sion referred to below on War-Time Costs and Profits in the Steel 
Industry (1925), calculate the rate of profit for each year on the 
whole capital supposedly invested in the business at the end of the 
year immediately preceding. Thus, if a company with an "invest- 
ment" of $100,000,000 adds $33,000,000 to surplus, the profit for 
the following year will be calculated on the basis of an "invest- 
ment" of $133,000,000. The result is to obscure the real position 
of the original investor or speculator who has held onto his 
securities. The surplus remaining in the business is theoretically 
the property of the stockholder just as much as the dividends paid 
to the stockholder in cash. For the absentee security-owner 
who takes no interest in the management of the concern and in 
fact for everybody concerned except the very small group that 
runs the business, this property right is purely theoretical. 
Accumulated surplus if handled skillfully makes it possible for 
the management to continue dividends in slack times, and it 
increases the owner's equity and therefore the value of his in- 
vestment. But it does not represent any money drawn in from 
outside. We therefore count accumulated surplus as an addi- 
tion to the owners' equity but not to the real investment. 

All money actually put into the business from outside has been 
counted as real investment. Of course, some money was in- 
vested foolishly and lost; while other parts of the investment 
were made for business as opposed to technical reasons, and 
have caused the companies a continuing expense over the period 
considered. Thirty large steel companies with an ingot capacity 
of 65,000,000 tons yearly are said to have coal mines with an 
annual capacity of 85,000,000 tons, which is more than they 
need currently. The Wheeling Steel Corp. has coal reserves 
said to be sufficient for one hundred years' supply at the 1930 
rate of consumption. U. S. Steel exploits currently only a frac- 
tion of its 800,000 acres of coal lands; and its ore lands, suffi- 
cient to assure it a full supply of ore for fifty years from 1931, 
are very incompletely developed. Investments in raw material 
supplies have often been made for reasons of business strategy; 
and the capital thus immobilized brings a return only in a 
strictly business sense, in that it preserves a company from 


competition or from future shortage. We follow the usual prac- 
tice in including inflated salaries and bonuses as an expense, 
except the notorious Bethlehem bonuses amounting to over 
$38,000,000. These, although listed by the company as an ex- 
pense and paid into the pockets of the high officials, were a part 
of "earnings" according to our definition. They have been so 
classified. Of course our figures are not to be compared with 
rates of return or rates of profit calculated by different methods. 
Most of the large companies have watered their stock at some 
time or other. In the absence of definite indications we have 
refrained from listing any of the preferred stock of U. S. Steel 
as water, though some think it was more than half water. The 
company itself has conceded (Annual Report for Ip2p, p. 22) 
that the common stock was all water. Bethlehem common stock 
was watered to the extent of $26,000,000 when that company 
absorbed its three chief competitors in 1922-23; Youngstown 
Sheet & Tube revalued its assets in 1922 and thus added water 
to the extent of $10,500,000; and so on. (Much of the Bethle- 
hem stock issued in 1904 may have been watered. We have not 
so listed it. Accountants for Youngstown Sheet & Tube charged 
in the Youngstown-Bethlehem merger suit (1930) that a 
$5,000,000 block of Bethlehem stock was issued against nothing 
but good- will. We have not taken this charge as proved.) 




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Accidents, 35^., 61 ; severity rates 
A of, 37 ff. 

Acme Steel Co., 154, 155. 

Age groups, 2iff., 97. 

Agricultural machinery, 197. 

Alabama, 25. 

Alan Wood Steel Co., 160. 

Aliquippa, 140^. 

Allegheny Steel Co., 75, HI, 160. 

Alloy steels, 197. 

Aluminum Co. of America, 123, 
124, 267. 

Amalgamated Association of Iron, 
Steel & Tin Workers, 69, 78, 79, 
150, 223 ff., 228; failure of lead- 
ership, 234^.; in 1919 strike, 
243ff : ; membership of, 254; op- 
position groups in, 255. 

American Bridge Co., 76, 86, 89. 

American Federation of Labor, 
102, 228, 238, 244, 249, 2Siff. t 

American Iron & Steel Institute, 

American Rolling Mill Co., 42, 
44, 51, 74, 79, 101, 121, 122, 
134, 151, 154, 160, 187, 190, 252. 

American Sheet & Tin Plate Co., 
68, 87, 162, 231, 252. 

American Steel & Wire Co., 23. 

Ammunition, manufacture of, 196. 

Andrews Steel Co., 252. 

Armaments, 195, 213. 

Armor plate, 195, 213, 216. 

Arrests, of workers, 239, 240, 268. 

Aston process, 121. 


Bankers, 188^. 
Bedeaux system, 84. 
Belmont Iron Works, 154. 
Bessemer process, 119. 


Bethlehem Steel Corp., 22, 26, 45, 
53, 54, 68, 76, 82, 85, 87, 101, 
102, 105, 109, in, 127, 128, 129, 
149, 151, 152, 154, 155, 156, 159, 
162, 1 66, 1 68, 169, 176, 179, 1 86, 
189, 196, 197, 199, 206, 208, 213, 
216, 218. 

Big plants, 

Blacklist, 163. 

Blaw-Knox Steel Co., 68, 87, HI, 
1 68. 

Bonus plans, 85^. 

Bosshardt furnace, 120. 

Briar Hill Steel Co., 175. 

Brissenden, Paul R, 65, 286. 

Byers, A. M., Co., 75, 79, in, 


Canonsburg Iron & Steel Co., 252. 
Capacity of industry, figures on, 

Carnegie interests, 77, 78, 195, 

217, 221, 222, 226. 

Carnegie Steel Co., 22, 28, 81, 84, 

106, HI, 128, 140, 144, 145, 164, 

166, 168, 216. 

Cartel, international steel, 198. 
Cement, 197. 
Central Alloy Steel Corp., 75, 76, 


Central Iron & Steel Co., 76. 
Charity, no. 
Chicago, 135. 
Clark, Edwin, 65. 
Cleveland-Cliffs Iron Co., 155, 


Cleveland Trust Co., 190. 
Close, Charles L., 170. 
Clyde Iron Works, 155. 
Coal and iron police, 139. 
Colorado Fuel & Iron Co., 22, 63, 

74, 84, 90, 102, 148, 150, 151, 

155, 157, 161, 180, 211. 



Combination, horizontal, i75ff.; 

vertical, 181^. 
Communist Party, no, 167. 
Communists, 141. 
Community Chest, 64, no, in, 

112, 257. 

Company doctors, 4$ff. 
Company stores, 105, 144^. 
Company towns, 140^., 147. 
Company unions, lo-n, 148, 266. 
Compensation, 49^. 
Competition, decline of, I75ff. 
Conference for Progressive Labor 

Action, 256, 265, 266. 
Consumption, of steel, 125. 
Continental Shares, Inc., 185, 192. 
Continuous mills, 120^. 
Convict labor, 139, 147. 
Corporations Auxiliary Co., 163. 
Corrigan-McKinney Steel Co., 68, 

102, 185. 

"Cost plus," 217. 
Crisis, 9, n, 115, 211. 
Crucible steel, 197. 
Crucible Steel Co. of America, 22, 

75, 85, 191, 209, 220. 
Czechoslovak workers, 30. 

Davison Coke & Iron Co., 160. 
Deaths, see mortality rates. 
Decentralization, of steel industry, 


Demands, of militant union, 258. 
Deportations, 108. 
Deputy sheriffs, 237^. 
Detroit, 135. 

Disarmament Conference, 129. 
Diseases, occupational, 35^., 51 ff. 
Dismissal wage, 101. 
Disston, Henry, & Sons, Inc., 155. 
Dividends, 211 ff. 
Doctors, company, 50. 
Dow Chemical Co., 124. 
Dumping, 130. 

East, U. S. Steel position in, 179. 
Eastern Rolling Mill Co., 76. 
Eaton, Cyrus H., 185. 
Edgewater Steel Co., 75. 

Education, 151. 

Electric furnace, 

Empire Steel Corp., 49, 75, 88. 

Employee stock ownership, 152^. 

Employers' tactics, against work- 
ers, 139^., 267. 

England, 56, 58-59, 131 ; wages in, 

Entrance wage rates, 62. 

Explosions, 47. 

Exports, I25ff. 

Fatalities, 34, 39, 44-45, 47, 53, 55. 
Federal Shipbuilding & Dry Dock 

Co., 129. 

Federal Trade Commission, 202. 
Ferro-manganese, 197. 
Finance capitalists, 204^. 
Financiers, 188^. 
Finishing trades, 183. 
Fitzpatrick, John, 243. 
Follansbee Bros. Co., 84, 252. 
Forged Steel Wheel Co., 187. 
Foreign-born workers, 24-25, 

27#v 98, 99ff v 108, 147. 
Foreign markets, 125. 
Foreign trade, combination in, 


Foster, William Z., 243^. 
Fortunes, from steel, 221. 
Frauds, in armament trade, 215^. 
Free speech, interference with, 

143, 246^., 268. 
Frick, H. C, 222, 226. 
Frick, H. C., Coke Co., 164, 270. 
Furbeshaw, W. L., 164. 

Gardens, 109. 

Gary, Indiana, 55, 72, 143. 

Gary, Judge Elbert H., 201, 218, 

221, 239, 249. 
Gates, John W, 221. 
Geographic distribution, of steel 

workers, 16-17, 134. 
Gompers, Samuel, 244. 
Good Fellows Clubs, 106-107, 109. 
Great Lakes Steel Corp., 187. 
Great steel strike of 1919, 243 ff.; 

causes of failure, 248^. 



Group insurance, 23, i^gff. 
Guaranty Trust Co., 189. 
Gulf States Steel Co., 75, 155, 
184, 186, 190. 


Hanna, M. A., Co., 185. 
Hanna interests, 190. 
Harvey Steel Co., 197. 
Hazards, occupational, 
High salaries, of company execu- 
tives, 218. 

Homestead strike, 225^. 
Hot jobs, 56. 
"Hot-mill cramps," 52^. 
Hours of work, 12, 21, 74. 
Housing, 71, 143. 
Hunger march, no. 

Illinois Steel Co., 43, 45-46, 84, 
85, 103, 105, 109, 164, 167. 

Industrial disputes, by years, 265. 

Industrial Workers of the World, 
236, 237. 

Industries, most highly mecha- 
nized, 292. 

Inland Steel Co., 49, 106, 155, 166, 
167, 184, 185, 206, 207. 

Insurance, 36-37, 50; compensa- 
tion, 38, 49 ff., 283; groups, 23, 
159^-; unemployment, in. 

Interchurch World Movement, 

International Harvester Co., see 
Wisconsin Steel Co. 

International Union of Mine, Mill 
& Smelter Workers, 233, 255, 

Investment trusts, 191 ff. 

Iron Range, strikes on, 237. 

Italians, 30. 


Jones & Laughlin Steel Corp., 
22, 35, 44, 50, 64, 105, 106, in, 
140, 149, 154, 155, 159, 1 60, 175, 
184, 190, 199, 210, 241. 

Jugoslavs, 31. 

Keystone Steel & Wire Co., 160. 
Knights of Labor, 224, 237. 
Knox, Philander C, 201. 
Kuhn, Loeb & Co., 189. 

Labor Research Association, 13. 
Laborers, 19^., 25, 26, 36. 
Lackawanna Steel Construction 

Co., 69. 

Lake Carriers Assn., 236. 
Lake Superior region, 177. 
Lament, Robert P., 10-11. 
Left Wing activities, 237^. 
Lenin, V. I., 188. 
Location of industry, 114^., 

Logan Iron & Steel Co., 76. 
Lorain Steel Co., 175. 
Lukens Steel Co., 76, 84, 105, 145, 
161, 175, 184. 


Machinery, 47, 

McKeesport Tin Plate Co., 84, 

1 60, 1 68, 175, 208. 
McKinney Steel Holding Co., 74. 
Markets, 123^. 
Maryland, 25. 
Mather, Samuel, 199, 221. 
Mather, William G., 185. 
Mechanization, 19^., 117^. 
Meldon, John, 90. 
Mellon interests, 123, 124, igoff. 
Mergers, iSoff.; recent, 184^. 
Mesaba Iron Range, 162, 164, 236. 
Metal Workers Industrial League, 

87, 1 66, 257- See also Steel & 

Metal Workers Industrial 


Mexican workers, 31, 33, 108. 
Michigan Steel Corp., 187. 
Midland Steel Products Co., 75. 
Midvale Steel Co., 76, 128,^195. 
Midwest, U. S. Steel position in, 

Militia, 49-50, 237, 246, 251; in 

Homestead strike, 228. 
Minimum wage, demand for. 268. 



Mitchell, Pentecost, 164. 
Molybdenum steel, 122. 
Monopoly, and profits, 294. 
Morgan, J. P., 128, 157, 176, 179, 
185, iSSff., 190, 194, 197, 201, 

215, 2IQ, 220. 

Mortality rates, 36-37, 55, 57, 72, 

Murder, of strikers, 228, 231, 232, 

238, 240, 241, 247, 270. 


National Assn. of Flat Rolled 

Steel Manufacturers, 200. 
National Guard, 49-50. See also 

National Recovery Act, 10-11, 

200, 263, 268. 
National Steel Corp., 142, 155, 

187, 190, 200, 210, 270. See also 

Weirton Steel Co. 
National Tube Co., 48, 86, 226. 
Navy contracts, 217. 
Navy Department, 127. 
Navy League, 127. 
Negro workers, 25, 27^., 72-73, 

98, 99^., 109, 139, 142, 147, 249; 

attitude of unions to, 232^., 

269; skill of, 33. 
"New Deal," and 



steel workers, 

New Jersey, 25. 

Newport Rolling Mill Co., 44, 


Newton Steel Co., 75, 89, 186. 
"Nominal investment," 295. 


O'Connor, Harvey, no. 
Occupational diseases, 3$ff., Siff* 
Ohio, 133. 
Old age pensions, 23, 24, iSSff., 


Old workers, 21 ff., 156. 
Oliver Iron Mining Co., 162, 164. 
Ore sources, 136. 
Organization of workers, see 


Otis & Co., 185, 219. 
Otis Steel Co., 75, 190. 
Output, average annual, 116. 

Page Steel & Wire Co., 22, 75. 
Palmer, Frank L., 164. 
Part-time employment, giff. 
Peacock, Alexander, 221. 
Pennsylvania, 133. 
Phipps, Henry, 222. 
Physical exertion, 18. 
Pickands, Mather & Co., 185. 
Pinkerton Detective Agency, 227. 
Pittsburgh district, 135. 
"Pittsburgh plus," 193^., 207. 
Pittsburgh Steel Co., 27, 75, 155, 

1 86, 209. 

Pneumonia, 52, 55^. 
Poisoning, 52^. 
Police, coal and iron, 139; state 

police, 246^. 
Polish workers, 30. 
Political demands, 262. 
Political jobs, union leaders in, 

Powderly, T. V., 225. 
Preparations for war, I26ff. 
Price control, 192^. 
Processes, description of, 19, 

Product, average per establish- 

ment, 173. 
Production, growth of, 124; sea- 

sonal, 95. 

Productivity, 115^. 
Profits, 42, 204 ff.; analysis of, 

294 ff.; of four leading com- 

panies, 298; war, 213^. 
Purchasing power, 65. 

Railway unions, 249. 

Rankin, Pa., 71. 

Raw materials, 126. 

Reading Iron Co., 76. 

Real wages, 65. 

Related industries, 137. 

Republic Steel Corp., 26, 68, 75, 
77, 84, 85, 86, 90, 102, 104, 154, 
155, 160, 175, 185, 189, 199, 200, 
210, 219, 239, 264. 

Republican Party, 235. 

Rest periods, 269. 

Rheumatism, 52, 56. 



Rockefeller, 148. See also Colo- 
rado Fuel & Iron Co. 
Roosevelt, Franklin D., 129. 
Root, Elihu, 201. 
Royalties, 207, 212^. 
Ruch, George, 164. 
Russia, see Soviet Union. 

Safety, 42^., 146. 

"Safety committees," 

St. Louis district, 136. 

Schneider-Creusot, 127. 

Schwab, Charles M., 83, 93, 128, 

179, 189, 196, 216, 218, 221. 
Scientific management, 8iff. 
Scrap, 137. 

Seasonal production, 95. 
Sellins, Fanny, 247. 
Seven-shift week, 80^. 
Severity rates, accident, 39^. 
Sharon Steel Hoop Co., 84, 89, 


Shenango Furnace Co., 76. 
Sherman Anti-Trust Act, 201. 
Sherman Corp., 163. 
Sickness, among steel workers, 


Skill, of workers, 19. 
Skoda Works, 127. 
Sliding scale, 69, 226. 
Sloss-Sheffield Steel & Iron Co., 

75, 160, 184, 209. 
Smith, A. O., Corp., 121, 122. 
Social insurance, HI, 269. 
Socialist Labor Party, 237. 
Soldiers, see Militia. 
Sons of Vulcan, 69, 223, 231. 
South, Negroes in, 33 ; U. S. Steel 

position in, 178; wage scale in, 

64, 268. 
Soviet Union, 80, 115, 159, 163, 

169, 258. 
Spang, Chalfant & Co., 159, 186, 

192, 270. 

Speed-up, 47^., 74, 8itf., 117, 269. 
Spy system, 147, 163, 227. 
Stagger plan, loi^f. 
Standards of living, 6off., 70. 
Steel code, IO-H, 200. 
Steel Export Association of 

America, 198. 

Steel and Metal Workers Indus- 
trial Union, 86, 90, no, 112, 
142, 257 ff; code of, 268^. 

Steel trust, 172^. 

Steel & Tube Co. of America, 185. 

Steelton, Pa., 31, 72. 

Steubenville, Ohio, 72. 

Stock ownership schemes, 152^. 

Strikes: Bethlehem (1910), 238; 
Bethlehem (1918), 241; Brad- 
dock (1916), 238; East Youngs- 
town (1916), 238^.; Home- 
stead, 225^.; McKees Rocks, 
237; Mansfield, 263, 265; of 
1909, 231; of 1919, 243^.; 
of 1933, 266, 270; of S. & 
M. W. I. U., 266; spontane- 
ous, 238; Warren, 265; West- 
inghouse, 240. 

Strike-breakers, 240, 246. 

Superior Steel Corp., 75, 159. 

"Surplus," 295. 

Tariff, 129^. 

Tavenner, Clyde H., 128. 

Taxes, 207. 

Taylor, Frederick W., 81. 

Taylor, Myron C, 157, 194, 222. 

Technique, 114 ff.; changes in, 

Tennessee Coal, Iron & Railroad 

Co., 44, 142, 144, 147, 165, 178, 

Terror, against strikers, 142, 

227^., 231, 233, 236, 237, 238^., 

240, 241, 246^., 270. 
Texas Steel Co., 252. 
Thomas Sheet Steel Co., 43, 49, 

Thompson, Edgar plant, 28, 77, 

78, 225, 241, 266. 
Tighe, M. R, 230, 250, 251, 253. 
Trade associations, 200. 
Trade Union Unity League, 
Tuttle, Charles W., 164. 
Twelve-hour day, 12, 74^. 
Tyson, Helen G., 113. 


Unemployed Councils, 112. 



Unemployment, 91 ff.; method of 
calculating, 288^. 

Unemployment insurance, in, 

Unemployment relief, 100^. 

Unions, 223 ff.; Amalgamated As- 
sociation of Iron, Steel & Tin 

236, 237; International Union 
of Mine, Mill & Smelter Work- 
ers, 233, 255, 267; Knights of 
Labor, 224, 237; Metal Work- 
ers Industrial League, 87, 166, 
257; Sons of Vulcan, 69, 223, 
231; Steel & Metal Workers 
Industrial Union, 86, 90, no, 
112, 142, 257^., 268; Western 
Federation of Miners, 236, 237. 

U. S. Department of Justice, 164, 

United States Steel Corp., 9, 41, 
42, 46, 48, 60, 67, 68, 69, 74, 
75, 81, 82, 85, 93, 102, 103, 107, 
109, no, in, 123, 128, 130, 135, 
139, 140, 142, 143, 145, 146, 149, 
152, 153, 154, 155, 157, 164, 165, 
169, 170, I72#., 189, 191, 194, 
198, 201, 205, 206, 207, 211, 213, 
218, 219, 229, 247, 250. 

U. S. Supreme Court, 201^. 

Universal Steel Co., 75. 

Unskilled workers, attitude of 
union to, 232. 

Van Sweringens, 190. 


Wage rates, 9, n, 19^., 62^. 

Wage reductions, 60, 67^. 

Wages, 6off.; demands for mini- 
mum wages, 268; differentials, 
284; statistical analysis of, 

War, profits from, 213 ff. 

War preparations, 126 ff. 

Washington Tin Plate Co., 75. 

Watered stock, 295. 

Weirton Steel Co., 22, 54, 68, 75, 
84, 142, 167, 175, 187. See Na- 
tional Steel Corp. 

"Welfare work," 106, 146^., 
i68ff., 257, 269. 

West Leechburg Steel Co., 155, 
157, 158. 

Western Federation of Miners, 
236, 237. 

Wheeling Steel Corp., 68, 75, no, 
157, 159, 167, 190, 200, 252. 

Wickwire, Frederick R., 222. 

Wickwire-Spencer Steel Co., 155. 

Wisconsin Steel Co., 22, 74, 100, 
149, 151, 154, 155, 157. 

Witherow Steel Corp., 75. 

Women workers, 18, 258, 269. 

Woodward Iron Co., 39, 75, 184, 
1 86, 200. 

Work clothes, 61. 

Workers, 15-33; dependents of, 
16; foreign born, 24-25, 27^., 
98, 99^., 108, 147; geographic 
distribution of, 16-17, 134; Ne- 
groes, 25, 27 ff., 33, 72-73, 98, 
99ff-, 109, 139, 142, 147, 232, 249, 
269; number of, 15, 16; number 
of, by companies, 181, 293; 
number of per establishment, 
174, 292; old, 21^., 156; physi- 
cal exertion of, 18; skilled, 
IQ ff>, 23, 30, 134, 249; women, 
18; young, 21^. 

Workmen's compensation laws, 
38, 58. 

Young workers, 21^., 258, 269. 

Youngstown district, 135. 

Youngstown Sheet & Tube Co., 
48-49, 68, 79, 85, 87, 103, 104, 
149, 150, 154, 155, 159, 185, 190, 
199, 206, 207, 239.